Guys, let me first wish you all a Merry Christmas and Happy
New Year. Wish you are having great time. Todays I am going to discuss some
interesting to the taxpayers. The bell, for all the Indian taxpayers, started
to ring again. If you are regular taxpayer,
it's nothing to worry about. But many of us could not calculate our tax and at
the end of the financial year struggle with void payslip.
Though I am not going to tell you the basic tax calculation.
But something you might find interesting. In India, we have many exemptions in
our income. As an employee of a private IT firm, I face some problems of what
allowance is taxable and what not. Most of the small and medium level company
offers allowance packages, which are mix of taxable and non-taxable allowances.
Some also get consolidated remunaration, without any break-ups of allowances, which
might not be bothered by the employer, but works great to an employee to reduce
tax payable.
I was
going through Income Tax Rule Books and sites recently, and here is what I got.
1)HRA(House
Rent Allowance) - HRA is exempted u/s 10(13A) of the income tax act. Least of
the following is exempted from HRA received
a)HRA
received
b)House
rent paid minus 10% of salary (salary means basic plus DP plus DA if term of
employment so provides)
c)50%
of salary (same meaning as above)in case of rented house situated in Bombay, Madras, Delhi or Calcutta
d)40%
of salary, if rented house is situated in any other places
(Pleasenote that, HRA is taxable, if it doesn't exceed 10%
of the salary)
2)City
compensatory allowance : Fully taxable.
3)Foreign
Allowance : Exempt from tax if paid outside India By the government to the
Indian citizen for rendering services outside India.
4)Fixed
medical allowance : Taxable.
5)Project
Allowance : Taxable.
6)Allowances
to Supreme court/High court Judges: Not taxable.
7)Servant/helper
Allowance : Taxable, if helper used for official purpose then exempted.
8)Transport
Allowance:Known also as LODA, means
allowance to meet expenses incurred for office to home and home to office is
exempted up to 800 per month maximum.
9)Tiffin Allowance: Taxable
10)Allowance to meet the cost of
travel on tour or on transfer (including amount paid for packing and
transportation of personal effects on such transfer): Exempted to the extent
allowances used for said purpose.
11)Allowance (know as DA in TA bill) paid
for purpose explained in the point above, to meet the ordinary daily charges on
account of absence from his normal place of duty): Exempted to the extent
allowance used for the said purpose
12)Conveyance allowance : To meet the
expenditure on conveyance in performance of duties of an official nature: Exempted
to extent allowance used for said purpose
13)Uniform allowance : Exempted to
the extent used for the said purpose
14)Children Education allowance : Rs 100
per month per child up to maximum of two child is exempted if expenses made in India
15)Children hostel allowance : Rs 150
per month per child up to maximum of two child is exempted if expenses made in India
16)Allowance granted to employee
working in transport system where no daily allowance has not been allowed to
meet daily expenses, done to meet his personal expenses during duty performance
from one place to other place : 70 % of such allowable exempted maximum up to 6000
per month.
17)Allowance granted for encouraging
the academic, research and other professional pursuits : exempted to the extent
used for said purpose
18)Many hilly area, remote area, field
allowances are exempted on various rate
19)Any other allowance : Generally
Taxable.
The tax
structure in India
is a bit tricky and tax calculation needs some brainstorming for the general
people. I hope, this list might be interesting to some of you.
It will be great if some other tax-saving schemes can be discussed along with transferring money to non earning members in the family. Like senior citizens in the family and to wife bothers and sisters.
