PROJECT ON CORPORATE TAX The salary tax planning of Mr. X while restructuring salary of Rs.
30 lacs on the basis of Income Tax Act, 1961, to understand the intricacies involved are given in a tabular form below: Particulars Income Tax calculation Income Tax calculation if as per tax planning (Rs.) 1200000 600000 Comments
Basic salary @ 100000 P.M HRA 1.actual HRA 2.actual rent paid 3.Less- excess rent paid over 10% of salary(60000)
1200000 600000 720000 120000
Basic is kept unaffected. HRA is kept that much as it necessary to get exemption. T he rules of HRA: Lower of the following three shall be exempted /deducted from gross salary.
Medical Reimbursement Special Allowance ( Other 845300 ) HEADS UNDER ALLOWANCES i) ii) iii) Travelling allowance Daily allowance Conveyance Allowance
The employee will give certificate that he has utilized the expenses on conveyance in performance of official duties. Helper engaged for the performance of official duties is exempted. The employee will give a certificate that he has paid the paid the amount to helper, for the performance of official duties.
150000 1660300 358533
Notes : 1 HRA and Interest on borrowed capital claimed both as the office is Far from Native house for which loan has taken
Academic Allowance Uniform Allowance
The employee will give certificate that he has utilized the expenses for purchase and maintenance of the uniform.
Total Children Education Allowance Children education
Transport Allowance TOTAL ALLOWANCES Balance (Gross Total Income) Deduction u/S 80C PPF 70000 LIC 30000 u/s 80 D ( 15000+ 20000) u/s 80 G donation to Prime Minister Relief fund ( 100 % ) u/s 24 (b) Interest on Borrowed Capital ( House Property ) Total income Tax on income 845300 2045300 100000
9600 1200000 3000000 100000
Rs. 100 per month per child up to a maximum of two children Any allowance granted to an employee to meet the hostel expenditure on his child at Rs. 9600 PA. This is exempted up to Rs. 300 per per child up to a maximum of two children.
and for parents ( senior citizen ) 20000/4 80 c ppf LIC 70000 30000
.As the property for which loan is taken is self occupied there maximum limit is 150000 only if property is consrtucted within three Years
3 Deduction u/s 80 D is Claim for Self 15000/.