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com/ Income under the head Salary

By CA. Tushar Makkar (AIR 47)
Allowances/ taxable components (A) XXXXX eTaxSupport

Perquisites (B) XXXXX Deduction under salary

a. Standard deduction of Rs. 50000
XXXXX b. Professional tax paid
Retierement benefit (C)
c. Entertainment allowance to govt employees (Least exempt)
XXXXX i. Amount received
Salary Income (A + B + C)
ii. 5000
XXXXX
iii. 20% of basic salary
Deduction (D)

Taxable income under head salary (A+B+C -D) XXXXX

Gratuity exemption: Govt Employee Fully exempt Car owned by Expenditure Used for official Used for personal Used for official & personal purpose Particulars Taxable Exempt
Fully exempted allowances - excempt upto incurred in performance of duties:
Other employees incurred By purpose purpose
a. Travelling allowances
If Employee covered under Gratuity act (Least exempt) Employer Employer Not a perquisites 10% of Car cost & -1800 PM & 900 PM (chauffer salary) if upto 1.6 Servant Arrange by Employee Arrange by employer
b. Daily conveyance
a. Actual gratuity received Actual expenditure litre/1600cc (If non Specified
c. Conveyance allowances
d. Helper allowances b. 20 lakhs incurred - 2700PM & 900 PM (Chauffer salary)if more than 1.6 employees)
e. academic allowances c. 15/26*Last drawn salary*No. of Completed years litre /1600 cc
f. Uniform allowances Note: More than 6 months would be considered as full year
g. allowances & perquisites to government employees If employee not covered under Gratuity act Employer Employee Not a perquisites 10% of Car cost -600 PM & 900 PM (chauffer salary) if upto 1.6 Gas/Electricity/water Arrange by Employee Arrange by employer
outside india employment a. Actual gratuity received litre/1600cc (If non Specified
b. 20 lakhs - 900PM & 900 PM (Chauffer salary)if more than 1.6 employees)
c. 15/30*last 10 months average salary* No. of full completed years litre /1600 cc
Note : 1. 12 Months would be considered as full completed years Employee Employer Not a perquisites Actual expenditure Actual expenditure incurred (- ) Loan Maxm outstanding balance*SBI Loan upto 20000
2. Maximum 20 lakhs exemption can be claimed by an employee in his life time
incurred -1800 PM & 900 PM (chauffer salary) if upto 1.6 Interest rate Loan for specified diseases
litre/1600cc
- 2700PM & 900 PM (Chauffer salary)if more than 1.6
litre /1600 cc
Assets for use 10% of original cost Use of laptops and
Partially exempt amount: Pension exemption: RFA computers
a. Children education allowance (for maxm 2 child) - Rs. 100/month/child Commuted pension
Assets transfer Value of Original cost (-) -
b. Children hostel expenditure allowance ( for maxm 2 child )- Rs. 300/month/child Govt Employee : Fully exempt
40% of Computer cost
c. Running allowance for transport sector employees - 70% of amount recevied or Other employee :
Gratuity received 20% of Car cost
Rs. 10,000 (lower) Government employers Licence fees (-) amount
- 1/3* Amount received on commutation/Percentage of commutation Unfurnished 10% of other assets
d. Transport allowance (Only for differently abled persons) - Rs. 3200 Pm received
Gratuity not received Accomdation
e. Mining/underrground allowance - Rs. 800 pm Credit card expenses Used for personal expenditure Using for Official purpose
-1/2* amount received on commutation/percentage of commutation
f. Tribal area allowance - Rs. 200 Pm
Uncommuted pension:
g. Composite hill compensatory allowance - Rs. 300 to Rs. 7000 Pm (Depends on Transport business Value at which provides to other -
area) Other employers employer publics
h. Border area, remote area, disturbed area allowance - Rs. 200 to Rs. 1300 Pm Telephone expenses - Fully exempt
(Depends on area)
Goods sold - Fully exempt
i. Compensatory field area allowance - Rs. 2600 pm Leave Encashment:
a. In Service : Fully taxable Education facility Cost to employer/ cost of education Per child not exceed Rs.
j. Compensatory, Modified field area allowance - Rs. 1000 Pm Owned by Employer Not owned by employer in a similar institute nearby area 1000
k. Counter Insurgency allowance - Rs. 3900 Pm b. Retiered :
Hotel
l. High Altitude allowance - Rs. 1060 to Rs. 1600 PM 1. Govt Employee : Fully exempt Unfurnished Accomodation -24% of salary or Free travel accomodation Amount incurred by employer/value -
m. Special compensatory highly active field area allowance - Rs. 4200 Pm 2. Other (lease exempt) Population > 25 lakhs Amount incurred (lower) offered to public
n. Island duty allowance - Rs. 3250 PM i. Amount received -15 % of salary
o. House rent allowance (Lease of the followings ) ii. 3 lakhs
Otherwise
i. Actual HRA received iii. Average salary for the past 10 Months * 10 Months 25 lakhs > population >10 lakhs Gift Aggregate value more than 5000 Upto 5000 exempt
-15 % of salary or
ii. 50% (4 metros)/40% (others) of salary iv. (Leave allowed (Subject 30 days in a year)- Leave availed - Leave already encashed)* Salary -10% of salary Free meals during office - Upto Rs. 50 per meal not
Amount incurred (lower)
iii. Rent - 10% of salary IMP: Maximum 3 lakhs exemption can be claimed by an employee in his life time hours taxable
Population < 10 lakhs Club Expenses Otherwise Incurred wholly for official
-7.5% of salary purpose.
Retrenchment compensation: Health club or sports club
a. Retrenchment compensation for scheme approved by CG exempt
b. Otherwise(Lease exempt) Transport facility - Exempt
i. Amount received Tea or snacks - Exempt
Other fully taxable allowances/ components ii. 5 Lakhs Travelling by rail or airlines - Exempt
a. Basic salary iii. 15/30* Avg salary of last 3 months* No of completed years of service and part thereof in
b. Dearness allowances excess of 6 months Accomodation for more - Exempt
c. Advance salary Furnished accomodation : Unfurnished taxable than 15 days in Hotel
d. Arrears of salary amount + 10% of cost of Original cost of Periodicals & Journals - Exempt
e. City compensatory allowances Voluntary retirement compensation (Least exempt) assets
f. Bonus i. Amount received
g. Commission ii. 5 Lakhs
h. Lunch / Tiffin allowances iii. Higher of the following ESOP
i. Overtime allowances o Last drawn salary * 3 * No of fully completed years
j. Non Practicing allowances o Last drawn salary * Balance no of months of service left
k. Medical allowances Medical facility (to employee & his
FMV of the sweat equity shares (-) Amount family member)
l. Transport allowances
recovered from the employees
Particulars RPF URPF SPF PPF
Contribution by Employer & Employee Employer & Employer & Assessee
Definitions of Salary under different situation Employee Employee independently
Unlisted Company Listed Company
Situation Salary Employee cont. 80C Not eligible 80C 80C
Entertainment Basic salary Employer cont. More than 12% taxable Not taxable Fully exempt NA
VRS Basic salary + DA (RB) Interest More than 9.5% taxable Not taxable Fully exempt Fully exempt Hospital maintained by employer - Fully exempt
Retrenchment Basic salary + DA Withdrawal Fully exempt Fully taxable. Fully exempt Fully exempt As determined by a Govt hospital - Fully exempt
Subject to below See below note merchant banker on the Notified diseases for prescribed diseases - Fully exempt
specified date Group Medical insurance- Fully exempt
conditions
No trading on exercise Premium on accident insurance policy- Fully exempt
Gratuity - Gratuity Basic salary + DA Note: Trading on exercise of option of option Medical treatment abroad - Fully exempt for patient & one attendant
act covered
Note :
Gratuity - Gratuity Basic salary + DA (RB)+% Comm RPF is exempt in the following cases only
GTI before medical treatment abroad expenditure <= 200,000 exempt upto
Leave salary Basic salary + DA (RB)+% Comm a. Service period of 5 years or more or
the amount
HRA Basic salary + DA (RB)+% Comm b. Termination due to illness, unavoidable reasons, or discontinuance of the employers business approved by the RBI otherwise taxable
RPF Basic salary + DA (RB)+% Comm

Specified employee Salary without non monetory benefits URPF is taxable as follows

RFA Basic Salary a. Employee cont. not taxable. Interest on employees contribution is taxable in other sources
DA (RB) b. Employers cont. & Interest thereon taxable under the head salary
Bonus/Comm Listed on one stock Listed on more than one Listed on one stock Listed on more than one stock
exchange stock exchange exchange exchange
All taxable allowances
All other monetory payments

(Opening price + Closing Closing price

Closing price
price)/2 (Opening price + Closing on the preeceding date when trading
* RB = Retierement benefits price)/2 was done
on the stock exchange in on the stock exchange in which volume
which volume of trade was of trade was higher on the preeceding
date when trading was done

Leave travel assistance (fare amount of employee and his

family member exempt)

Conditions : Exemption:
a. any place in india Shortest route of cost of travel
b. Twice in block of four calendar years a. Airways : Economy class
c. One LTA can be carry forward b. Train: 1 class AC
d. Exemption is for 2 child. No restriction c. Recognised transport: deluxe class
born before 01.10.1998 d. Other transport : Equivalent fare of 1
class Ac