Explanation on Exemptions and Reliefs available under Income Tax Act for Salaried
Basic | |
HRA | Note 1 |
LTA | Note 2 |
Conv Allow | Note 3 |
Spl Allow | |
Attire Allowance | Note 4 |
Medical Allowance | Note 5 |
Gross Take Home | |
PF deduction | |
ESIC | |
Net Take Home | |
Reimbursements | |
Driver Allowance | Note 6 |
Vehicle Maintenance | |
Relocation Allowance | |
Total Monthly Take Home | |
PF | |
ESIC | |
Medi Claim | Note 7 |
Gratuity | |
Bonus | |
CTC |
Other relevant exemption provisions:
Interest on Housing Loan
Exempted investments
Note 1: House Rent Allowance:
HRA exemption can be claimed by employees who are incurring House Rent, subject to providing rent receipt as per annexure 1 and limitations for the same are:
Minimum of the following can be claimed under HRA
a) Actual HRA received
b) 50 % of Salary in case of Metros and 40% of salary in case of non Metros
c) Actual rent paid reduced by 10% of Salary
Salary for this purpose Basic & DA as applicable
Note 2: LTA
The exemption is available on the expenses for two journeys in a block of four calendar years.
The current four-year block is from January 1, 2010 to December 31, 2013.
The amount has to be spent on transportation – either by air, rail or road.
Other travel expenses like taxi / cab fare, auto fare, etc. cannot be claimed as exempt.
If you travel by rail (or road), the maximum amount that can be claimed as exempt is AC I Class fare to your destination by the shortest route; or the amount spent, whichever is less, is not taxable.
If you travel by rail (or road), the maximum amount that can be claimed as exempt is AC I Class fare to your destination by the shortest route; or the amount spent, whichever is less, is not taxable.
If you travel by air, the maximum amount that can be claimed as exempt is the economy class air fare to your destination by the shortest route.
Note 3: Conveyance Allowance
Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if provided as conveyance allowance. No bills are required for this amount.
Note 4: Attire Allowance
Attire Allowance is exempted to extent amount received subject to submission bills for amount received for purchase of formal dress which can include Belts & Shoes.
Note 5: Medical Allowance
Medical allowance is exempted from Income to the extent of Rs.15000/- PA supported by Bills.
Note 6: Driver Allowance & Vehicle Maintenance
Driver allowance & Vehicle Maintenance reimbursements are taxable as value of perquisite provided by employer to the employee, if the Vehicle is used partially for official as well as personal purposes.
a. If the car is owned or hired by the Employer:
Amount to be included as taxable income is
Rs.1800/- PM in case of car is less than 1600 CC &
Rs.2400/- PM if the car is more than 1600 CC
Rs.900/- PM for if the Driver allowance is provided
b. If the car is owned by the employee:
Actual amounts paid are reduced by
Rs.1800/- PM in case of car is less than 1600 CC &
Rs.2400/- PM if the car is more than 1600 CC
Rs.900/- PM for if the Driver allowance is provided
c. If the employee owns any other vehicle other than car
Actual amount paid reduced by Rs.900 PM
Note 6: Mediclaim
Irrespective of the amount of reimbursement paid by the company, employee can avail exemption up to Rs.15000/- towards Medical Insurance premium payments.
If the medical insurance cover includes Senior Citizen i.e. (65 years & above) the exemption is extended up to Rs.20000/-
Interest on Housing Loan:
Interest paid up to Rs.150000/- is exempted from Income tax on Housing Loan applied for the self occupied property.
Exempted Investments:
Investments made up to Rs.100, 000/- made in the following notified investments are exempted
a) Employee’s Contributions towards EPF
b) LIC Premiums of self, spouse & minor Children
c) Contributions to PPF, superannuation funds, deferred annuities
d) Unit linked Insurance premiums
e) Tuition fees paid for children education
f) Term Deposits of Banks for this purpose
g) Housing Loan principal repayments
Rs.20,000/- additional exemption available for investment made into Notified Infrastructure Bonds as per Sec 80CCD like IDFC Infra Bond, L&T Infra Bond etc.
Disclaimer: Sincere efforts has been made to explain to extend as simple as possible, readers requested refer to respective provisions of act,author is not responsible for any loss or damage based on this readings, its is provided only as explanation as understood by the author.
Annexure 1
RECEIPT OF HOUSE RENT
(Under Section 1 (13-A) of Income Tax Act)
Received a sum of Rs. ____________________________ (Rupees________________ ________________________________________________________________________
Towards the rent @____________________ per month from ___________________ to __________________ in respect of House No.____________________________ _________________________________________________ situated at ____________
_______________________________________________________________________
(Affix Revenue Stamp of Rs.1/-)
Date: Signature of the House Owner
Name:
Address: _____________________
______________________________
______________________________
PAN No: _____________________
