Calculation of Income from Salary

Filed Under: Tax

This income from salary calculator is applicable for ay 2015-16 and is exactly similar to how it would appear in shecule S of form ITR-2 to be submitted as Income tax Return for Assessment Year 2015-16 by Individuals and HUFs not having Income from Business or Profession.




Taxable Income from Salary Calculator

Calculation of Income from Salary Taxable under Indian Income Tax Act 1961
1 Salary (Excluding all exempt/ non-exempt allowances, perquisites & profit in lieu of salary as they are shown separately below)
2 Allowances exempt under section 10 (Not to be included in 7 below) – Refer Notes on Allowances
i Travel concession/assistance received [(sec. 10(5)]
ii Tax paid by employer on non-monetary perquisite [(sec. 10(10CC)]
iii Allowance to meet expenditure incurred on house rent [(sec. 10(13A)]. Use HRA Calculator to ascertain taxable amount.
iv Other allowances
3 Allowances not exempt (refer Form 16 from employer)
4 Value of perquisites (refer Form 16 from employer)
5 Profits in lieu of salary (refer Form 16 from employer)
6 Deduction u/s 16 (Entertainment allowance by Government and tax on employment)
7 Income chargeable under the Head ‘Salaries’ (1 + 3 + 4 + 5 – 6)

If you have income from House Property in addition to salary income,you may use our Income from house Property Calculator here to determine the taxable income under that Head which would help you fill Schedul HP of income tax return ITR-2.

Fully Taxable Allowances

The following are some examples of fully taxable allowances. However, you must remember that these are only illustrative and not the full list of taxable allowances.

  • Dearness Allowance and dearness pay
  • Fixed medical allowance
  • Tiffin allowance
  • Servant allowance
  • Non practicing allowance
  • Hill allowance
  • Warden/ Proctor allowance
  • Deputation allowance
  • Overtime allowance
  • City Compensatory allowance
  • Telephone allowance
  • Holiday allowance
  • Special qualification allowance
  • Any other allowance

Partially Exempted Allowances

Type of Allowance Amount Exempt from Tax
(i) House Rent Allowance. Least of the following is exempt from tax and the balance is table.

  • Actual annual HRA received from the employer.
  • Rent paid in excess of 10 percent of salary.
  • 50 percent of annual salary, if the employee lives in the four metro cities of Delhi, Mumbai, Chennai and Kolkata or 40 percent of annual salary if the employee lives in any other tow or city in India.
(ii) Entertainment Allowance. This is allowable as a deduction under Section 16 for a goverment employee along with any tax on employment. The whole of such amount received is included in Income from Salary and then the least of the following amounts shall be allowed as deduction under Section 16

  • Actual amount received
  • 1/5 of salary, where salary means Basic Salary
  • Rs. 5000
(iii) special Allowance for performance of official duties. These allowances are exempt to the extent of actual amount received or the amount spent for the purpose of such official duties, whichever is less. A few examples of such allowances are Travelling allowance, Daily allowance, Helper allowance, etc.
(iv) Transport Allowance. This allowance is typically provided for the purpose of commuting between office and home and it is exempt upto Rs.800 p.m. However, in the case of blind or physically handicapped, exemption is provided upto Rs. 1600 p.m.
(iv) Children Education Allowance. This allowance is exempt to the extent of the least of the following.

  • Actual amount received per child
  • Rs.100 p.m. per child upto a maximum of 2 children
(iv) Children Hostel Expenditure Allowance. This allowance is exempt to the extent of the least of the following.

  • Actual amount received per child upto a maximum of 2 children
  • Rs.300 p.m. per child upto a maximum of 2 children.
(iv) Tribal Area Allowance. This allowance is exempt to the extent of the least of the following.

  • Actual amount received
  • Rs. 200 per month.

Fully Exempted Allowances

The following are some fully exempted allowances and these are typicslly available only to certain categories of citizens.

  • Any foreign allowance paid by the government of India to an Indian citizen outside India for rendering services abroad. This typically covers government employees working in Indian consulate and embassy offices situated in a foriegn country. Nature of such allowances can be anything and may include for e.g. Overseas allowance, Children Education allowance, etc.
  • Sumptuary allowances – These are typically allowances given to High Court/ supreme Court Judges and they are fully exempt from income tax.
  • All allowances paid by UN organizations to its employees are fully exempt from income tax.


Recommended Videos

HOW TO USE FORM 16 TO FILE TAX RETURN FOR SALARY INCOME | BE A PRO!
Title
HOW TO USE FORM 16 TO FILE TAX RETURN FOR SALARY INCOME | BE A PRO!
Income Tax : Basic Concepts (Part A) AY 2016-17
Title
Income Tax : Basic Concepts (Part A) AY 2016-17
Income Tax - How it is calculated?
Title
Income Tax - How it is calculated?
How to Calculate Income Tax that's Due or Tax Payable
Title
How to Calculate Income Tax that's Due or Tax Payable
INCOME TAX SLAB RATE | 2016-17 | INCOME TAX RATE (INDIVIDUALS and HUF)
Title
INCOME TAX SLAB RATE | 2016-17 | INCOME TAX RATE (INDIVIDUALS and HUF)

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Recommended Videos

HOW TO USE FORM 16 TO FILE TAX RETURN FOR SALARY INCOME | BE A PRO!
Title
HOW TO USE FORM 16 TO FILE TAX RETURN FOR SALARY INCOME | BE A PRO!
Income Tax : Basic Concepts (Part A) AY 2016-17
Title
Income Tax : Basic Concepts (Part A) AY 2016-17