SALARY SAVER

EARN MORE; PAY LESS

SALARY AND TAX
Major source of revenue for Government is tax. Majority of tax
payers in India are the salaried people. At the same time there
are many ways to reduce tax also.

Here we have made our sincere effort to simplify the tax

treaties for your better understanding.
SALARY AND TAX (Contd…)
INCOME TAX RATE
Total Income Tax Rate
Up to Rs. 2,50,000/- Exempt
From 2,50,001 to 5,00,000 5%
From 5,00,001 to 10,00,000 20%
Income Exceeding Rs.10 Lakhs 30%

Health and Education Cess (HEC) at 4% is also to be payable along

with tax. However, if your Total Income is less than Rs.3.5 Lakhs you
can still reduce the tax by Rs.2,500/- by way of rebate .
WHAT DOES YOUR SALARY CONTAIN?
 Basic

 Dearness allowance

 House rent allowance

 Conveyance allowance

 Medical allowance

 Overtime allowance

 Bonus etc…
INCOMES EXEMPT FROM TAX

Not all components of your salary is taxable. Your

Salary may also contain “Tax Free” Allowances, some
of which are completely tax free and some are partially.
Ex :

House Rent Allowance

Children Education Allowance
Children Hostel Allowance
Travelling and Medical Allowance. Etc.
INCOMES EXEMPT FROM TAX (Contd…)

> House Rent Allowance (HRA) :-

HRA is paid to bear the Rental Expenditure and you

can claim up to 50% of your Salary as “Tax Free”
depending upon the city of your Residence.

> Children Education Allowance :-

Up to Rs.100 per month per child up to a maximum of

2 Children is exempt. So Maximum of Rs.2,400/- per
annum you can save from tax.
INCOMES EXEMPT FROM TAX (Contd…)

> Children Hostel Allowance:-

Up to Rs.300/- per month per child up to maximum of

2 Children is exempt. So under this clause you can
save Maximum of Rs.7,200/- per annum from tax.

> Travelling Allowance and Medical Allowance :-

Standard amount of Rs.40,000/- (Earlier

Rs.19,200+15,000=34,200/-) from salary is deductible.
So You can Save Rs.40,000/- from Tax every year.
INCOMES EXEMPT FROM TAX (Contd…)

> Professional Tax :-

Maximum of Rs. 2,400/- per annum.

> Entertainment Allowance :-

Maximum of Rs.5,000/- per annum. (Only for

Government Employees)
RETIREMENT BENEFITS – ARE THEY
TAX FREE?
 Gratuity Received:-

15 days salary for each completed years of employment is

Tax-Free. Maximum exemption of Rs. 20 Lakhs can be
claimed by an employee.

 Encashment of unutilized leave:-

No of unutilized leaves (Restricted to 30 Leaves per annum)

as multiplied by average monthly salary is exempt. Maximum
exemption of Rs. 3 Lakhs can be claimed by an employee.
RETIREMENT BENEFITS (Contd…)

 Amount received on voluntary retirement:-

Maximum Rs. 5 Lakhs of amount received is exempt from tax

 Withdrawal of PF Contributions made:-

Kindly withdraw your PF account balance only after 5 years

of service. PF withdrawals after 5 years of continuous service
is completely Tax-free.
INVESTEMENT TIPS TO REDUCE TAX
 Life insurance premium paid
 Contribution to provident fund / Public Provident Fund
 Mutual fund investments
 Tuition fees paid
 Repayment of housing loan
 Five year fixed deposit
 Medical Insurance Premiums Paid.
 Interest on Educational Loan borrowed
 Investment in Equity Linked Savings Scheme (ELSS)
 Interest paid on loan taken for residential house property
 House Rent paid Etc..
THANK YOU

Sanjay R
Chartered Accountant
+91 77602 52581