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    40 Income From Salary PDF

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    kiranshingote
    This document discusses various aspects of income from salary under the Indian Income Tax Act, including: 1) Exemptions from income such as leave encashment, retrenchment compensation, voluntary retirement schemes compensation, house rent allowance, gratuity, and provident funds are outlined. 2) Perquisites provided by employers including rent-free accommodation, amenities, other FBT perquisites, and motor car usage are defined along with their tax treatment. 3) Deductions available from salary income such as entertainment allowance and profession tax are mentioned.

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    40 Income From Salary PDF

    Uploaded by

    kiranshingote
    210 views12 pages
    This document discusses various aspects of income from salary under the Indian Income Tax Act, including: 1) Exemptions from income such as leave encashment, retrenchment compensation, voluntary retirement schemes compensation, house rent allowance, gratuity, and provident funds are outlined. 2) Perquisites provided by employers including rent-free accommodation, amenities, other FBT perquisites, and motor car usage are defined along with their tax treatment. 3) Deductions available from salary income such as entertainment allowance and profession tax are mentioned.

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    INCOME TAX NOTES

    Original Title

    40_income_from_salary.pdf

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    This document discusses various aspects of income from salary under the Indian Income Tax Act, including: 1) Exemptions from income such as leave encashment, retrenchment compensation, voluntary retirement schemes compensation, house rent allowance, gratuity, and provident funds are outlined. 2) Perquisites provided by employers including rent-free accommodation, amenities, other FBT perquisites, and motor car usage are defined along with their tax treatment. 3) Deductions available from salary income such as entertainment allowance and profession tax are mentioned.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    210 views12 pages

    40 Income From Salary PDF

    Uploaded by

    kiranshingote
    This document discusses various aspects of income from salary under the Indian Income Tax Act, including: 1) Exemptions from income such as leave encashment, retrenchment compensation, voluntary retirement schemes compensation, house rent allowance, gratuity, and provident funds are outlined. 2) Perquisites provided by employers including rent-free accommodation, amenities, other FBT perquisites, and motor car usage are defined along with their tax treatment. 3) Deductions available from salary income such as entertainment allowance and profession tax are mentioned.

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    Download as pdf or txt
    of 12

    Page 1 of 12

    Income from Salary


    BASIC CONCEPTS : Salary = Monetary + Non Monetary.

    Employer Employee Relationship.

    FBT liable to pay by Employer.

    Member of Household means (i) Spouse(s); (ii) Children & their Spouse; (iii) Parents; (iv) Servants; (v) Dependents.

    Electronic Gadgets means data storage devices not house hold appliances.

    Page 2 of 12

    EXEMPTIONS:-

    (U/S 10)

    Leave Encashment:Employee

    [u/s 10 (10AA)]

    Pvt. Employee

    Govt. Employee

    Least of following: (1) Rs. 3,00,000/-; (2) Amt. actually received; (3) Last 10 months salary; (4) Cash Equivalent i.e. (Salary X Credit Months)

    Fully Exempt

    Credit

    Completed = year (-) Months of Service

    Leave Taken

    Salary Salary (BS + DA + Commission on sales) for last 10 months For this =------------------------------------------------------------Section 10

    Page 3 of 12

    Retrenchment Compensation:Least of following: (1) Rs. 5,00,000/-; OR (2) Amt. as per Law.

    [u/s 10 (10C)]

    VRS Compensation:Least of following: (1) (2) (3) Rs. 5,00,000/-; Amt. Actually Received; Least of following 2 amounts.

    [u/s 10(10C)]

    Last Completed Month X 3 X years Salary Service

    Last Remaining Month X months of Salary Service

    HRA:Least of following: (1) (2) (3) 10 % of Salary; Amt. Actually Received; Amt. if Accommodation situated in

    [u/s 10(13A)]

    Mumbai, Delhi, Kolkata & Chennai

    Other Case

    50%

    40%

    Page 4 of 12

    Gratuity:Employee

    [u/s 10 (10)]

    Pvt. Employee

    Govt. Employee

    Least of following: (1) Rs. 3,50,000/-; (2) Amt. actually received; (3) Formula.

    Fully Exempt

    Formula: Pvt. Employee

    Covered under Act

    Not Covered under Act

    Last 15 No. of Drawn X ---- X years Salary 26 Service

    Last 1 No. of Drawn X ---- X years Salary 2 Services

    Salary: As per Leave Encashment. Fraction: Pvt. Employee

    Covered under Act

    Not Covered under Act

    Page 5 of 12

    Provident Fund: -

    SPF RPF URPF PPF Contribution Deduction Deduction No any Deduction by u/s 80 C u/s 80 C Deductions u/s 80 C Employee Contribution Fully Exempt Exempt $ NA by Employer Exempt up to 12 % of Salary Interest Fully Exempt Exempt $ Fully Credited in Exempt up to Exempt Account 9.5 % p.a. Amt. Fully Exempt * Exempt $ Fully Withdrawn Exempt Exempt

    Notes:1. Exempt
    $

    Contribution of Employee Employer Fully Taxable under Exempt Profit in lieu of Salary

    Interest Credited Taxable under Income from Other Sources

    2. Exempt * (i) Service More than 5 yrs; OR (ii) Tfd. PF to next Service.

    Page 6 of 12

    Pension: -

    [u/s10 (10A)]

    Uncommuted Pension is Fully Taxable for All Cases.

    Commuted Pension: Employee

    Pvt. Employee

    Govt. Employee

    Gratuity Received

    Fully Exempt

    rd

    1/3

    Exempt

    Exempt

    Page 7 of 12

    PERQUISITES:-

    [U/S 17 (2)]

    Value for Rent Free Accommodation :-

    (a)

    Furnished: XXX X

    Value as per Unfurnished Accommodation + 10 % Original Cost (If Furniture Owned & Provided by Employer) Lease Charges, if any

    X ----XXX

    (b)

    Unfurnished:

    Page 8 of 12

    Employee

    Pvt. Employee

    Govt. Employee

    License Fees

    Hotel

    Lease Charges

    Least of following: (1) 24% of Salary; OR (2) Actual amt. received. Accommodation owned by Employer (Population as per Census 2001)

    Least of following: (1) 15% of Salary; OR (2) Actual amt. received.

    Less than 10L

    10L To 25L

    More than 25L

    7.5% of Salary

    10% of Salary

    15% of Salary

    Page 9 of 12

    Accommodation Provided at concessional Rate :Value as per Accommodation at Rent Free (-) Cash Collected from Employee XXX (X) XXX

    Value for Any Benefit / Amenity :Only for Specified Employees (a) Domestic Servants; (b) Gas, Water & Electricity Charges; (c) Education Facility provided by Employer for Household Member : If facility provided to Children of Employee then exemption up to Rs. 1,000/-p.m. If the institution owned by:

    Employer Exemption up to Rs. 1 Th.

    Other Case Entire Amt. as Perquisites

    Page 10 of 12

    Perquisites of Other FBT :(A) (B) Applicable for All Employees; OR Applicable to Employee whose Employer not subject to FBT.

    (A) Applicable for All Employees: (i) Interest free / concessional Loan: Difference between Actual & SBI Interest Rate.

    (ii) Usage of Movable Assets: There must be owned / hire by Employer. (a) 10 % of Original Cost; OR (b) Actual Cost taken.

    (iii) Transfer of Movable Assets:

    Movable Assets Motor Car Computers & Electronic Gadgets Other Assets

    Rate of Depn. 20 % 50 % 10 %

    Method of Depn. W.D.V. W.D.V. S.L.M.

    Page 11 of 12

    (B)

    Applicable to Employee whose Employer not subject to FBT: Motor Car Usage & its Expenses:(i) Exps. Paid by Employer / Employee:Exps. Born by / Particulars Employer Employee First 1.6 Lt3 Rs. 1200/p.m. Rs. 400/p.m. Next 1.6 Lt3 Rs. 1600/p.m. Rs. 600/p.m. Drivers Salary Rs. 600/p.m. Rs. 600/p.m.

    (ii) Conveyance provided:-

    Use of M. Car for:

    Pvt. Purpose Running & Maintenance Exps.

    Partial Pvt. Purpose Actually Incurred by Employer reduce by Rs. 600/-.

    Page 12 of 12

    DEDUCTIONS :-

    (u/s 16)

    (i) Entertainment Allowance : Only for Govt. Employees. (a) (b) (c) Rs. 5 Th.; Amt. Actually Received; OR 20 % of Salary. Whichever is Least

    (ii) Profession Tax : On the Payment Basis.

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