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SALARY

BASIC SALARY Dearness Allowance (D.A.) Commission Bonus Gratuity Leave Salary Encashment Pension Retrenchment Compensation VRS Other Receipts in lieu of Salary Allowances Perquisites. SALARY. Income from Salary. Gross Salary[As per defination u/s17(1)] Basic Salary

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SALARY

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  1. BASIC SALARY • Dearness Allowance (D.A.) • Commission • Bonus • Gratuity • Leave Salary Encashment • Pension • Retrenchment Compensation • VRS • Other Receipts in lieu of Salary • Allowances • Perquisites SALARY

  2. Income from Salary • Gross Salary[As per defination u/s17(1)] Basic Salary +Taxable portion of gratuity,pension,LTC,etc +Taxable portion of allowances +Taxable portion of perquisites +Profit in lieu of Salary +Taxable portion of contribution to RPF made by employer GROSS SALARY Less:Deduction u/s 16 16(ii) Entertaintment Allowance 16(iii) Professional Tax INCOME FROM SALARY

  3. Deductions u/s 16 • Entertainment allowance This allowance is applicable to central & state government employees Deduction: Lease of following 1.5000 2. 20% of Basic Salary 3.Amount Actually received .Professional Tax[Sec 16(ii)] Deduction is amount actually paid during the previous year

  4. Special Allowance( Rule 2BB) Sec 10(14)(i) Official: The amount given to meet expenses related to employment. The exemption is- Amt of actual expenditure or amount of allowance, whichever is less. These allowances are Traveling allowance, Daily allowance, Helper allowance, Uniform allowance

  5. Sec10(14)(ii) Personal: The allowance given to meet personal retirement of the employee. The exemption is – amt of allowance or limits specified whichever is less

  6. House Rent Allowance Minimum Of Following Shall Be Exempted u/s 10(13A): 1) Actual Received 2) 50% or 40% of Salary 3) Rent Paid- 10% of Salary NOTE: 1) 50% When house is situated in a metro city, else 40%. 2) Salary = Basic+D.A.(if terms so provide)+ turnover based commission

  7. Sec10(7) Foreign Allowance Any allowance or perquisites paid or allowed outside India by the government to a citizen of India, for rendering services outside India, is fully exempt from tax Allowances to high court judges u/s 22A(2) of the high court judges Act,1954 Sumptuary allowance given to High court & Supreme court judges Allowance received by an employer of UNO from hid employer

  8. GRATUITY sec 10(10) During Continuation Of Service On Termination Of Service If Non Government Employee Covered Under PGA Fully Taxable YES YES NO NO Minimum Of Following Exempted 1) Actual Gratuity Received 2) Rs. 3,50,000/- 3) P.M. Salary X Completed Year of Service X 15/26 Minimum Of Following Exempted 1) Actual Gratuity Received 2) Rs. 3,50,000/- 3)1/2 month Avg Salary X Completed Year of Service Fully Exempt Note: * PGA= PAYMENT OF GRATUITY ACT *SALARY= BASIC+D.A. *COMPLETED YEAR includes every completed year & period in excess of 6 months shall be treated as a year Note: *AVG. SALARY= (10 MONTHS BASIC SALARY+D.A.+TURNOVER BASED COMMISSION) / 10 *COMPLETED YEAR ignores ANY FRACTION

  9. LEAVE SALARY ENCASHMENT sec10(10AA) During Continuation Of Service On Termination Of Service Fully Taxable If Non Government Employee YES Minimum Of Following Exempted 1) Actual leave encashment Received 2) Rs. 3,00,000/- 3) 10 Months Average Salary 4) 30 Days Average Salary For Every Completed Year Of Service, Subject To Leaved Availed During The Tenure Of Service. NO Fully Exempt Note: *AVG. SALARY= (10 MONTHS BASIC SALARY+D.A.+TURNOVER BASED COMMISSION) / 10 [LAST 10 MONTHS EXACT FROM THE DATE OF RETIREMENT.] *COMPLETED YEAR ignores ANY FRACTION

  10. PENSION sec10(10A) UNCOMMUTED PENSION COMMUTED PENSION FULLY TAXABLE IF NON GOVERNMENT EMPLOYEE ASSESSEE RECEIVED GRATUITY YES YES NO NO FULLY EXEMPT ONE THIRD OF TOTAL PENSION COMMUTED SHALL BE EXEMPTED ONE HALF OF TOTAL PENSION COMMUTED SHALL BE EXEMPTED

  11. RETRENCHMENT COMPENSATION sec10(10B) If Compensation Paid Under Any Scheme Approved By The Central Government. In any other Case MINIMUM OF FOLLOWING SHALL BE EXEMPTED a) ACTUAL AMOUNT RECEIVED b) Rs.5,00,000/- c) ANY AMOUNT CALCULATED UNDER INDUSTRIAL DISPUTE ACT,1947 i.e Average of last 3 months8* a5/26 * No of completed years of service and part there in excess of 6 months Nothing Shall Be Taxable.

  12. VOLUNTARY RETIREMENT In any other Case RECEIVED FROM SPECIFIED EMPLOYERS MINIMUM OF FOLLOWING SHALL BE EXEMPTED a) ACTUAL AMOUNT RECEIVED AS PER V.R.S. GUIDELINES* or b)Rs.5,00,000/- FULLY TAXABLE GUIDELINES:- a)COMPLETED AGE OF 40 YEARS OR COMPLETED 10 YEARS OF SERVICE (IT IS NOT APPLICABLE ON PUBLIC SECTOR COMPANY) b)THIS IS FRAMED TO REDUCE THE STRENGHT OF EMPLOYEES. c)THE VACANCY CAUSED BY VRS IS NOT TO BE FILLED UP d)THE RETIRING EMPLOYEE IS NOT EMPLOYED IN ANOTHER COMPANY BELONGING TO THE SAME MANAGEMENT e)* THE AMOUNT OF COMPENSATION DOES NOT EXCEED = 3 MONTHS SALARY FOR EACH COMPLETED YEAR OF SERVICE or SALARY AT THE TIME OF RETIREMENT x BALANCE MONTHS OF SERVICE LEFT # SPECIFIED EMPLOYERS :- a)COMPANY b)LOCAL AUTHORITY c)CO-OPERATIVE SOCIETY d)ANY AUTHORITY ESTABLISHED UNDER CENTRAL/STATE/PROVINCIAL ACT e)SPECIFIED UNIVERSITY f)INDIAN INSTITUTE OF TECHNOLOGY(IIT) g)STATE GOVERNMENT h)CENTRAL GOVERNMENT i)NOTIFIED INSTITUTION j)NOTIFIED INSTITUTION OF MANAGEMENT (IIM)

  13. Sec10(11,12,13) Any sum received from PF,RPF,SAF

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