Income tax exemption for salaried employee’s |Various income tax exemptions for salaried employees is mentioned below. These income tax exemptions for salaried employees are highly recommended for everyone as they help to save tax legally which can reduce the tax burden on salaried employees.
Please see the link attached to the points below for a detailed look at each income tax deduction for salaried employees.
1. HRA discount for salaried employees
Many employers pay House Rent Allowance (HRA) to their employees to stay in a better place. A portion of the house rent allowance paid by an employer to an employee is exempt from income tax and income tax is levied only on the remainder.
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2. Income tax deduction on Leave travel allowance
Many employers allow their
employees to go on vacation with their families. The amount paid by the
employer to an employee to go on leave is exempt from the collection of a
certain amount of tax on the condition that the amount paid was for leave only
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3. Discount on cashing out pages for salaried employees
Most employers give all their employees a certain number of giving days as can be claimed as leaves. However, if a person does not claim these pages, many employers also offer their employees the option to cash these pages, meaning that employers pay employees extra for pages that were allowed to be accepted but not taken.
This amount received as leave encashment is also allowed to claim a discount up to a certain amount.
4. Pension Exemption from salaried employees
When an employee retires, many employers pay a pension to their employees. Sometimes, the employer pays the pension out of his own pocket, and in some cases, the employer buys an annuity, and then the pension is paid by the company from which the annuity was purchased.
The pension can be of 2 types, unmarried and uncommitted. The entire amount of the pension is exclusively paid in the modified pension and this amount is paid in regular break installments in the unresolved pension.
Regardless of the type of pension, both types of pensions are exempt from income tax up to a certain limit.
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5. Gratuity exemption to the salaried persons.
Gratuity is a gift made by the employer to his or her employees in appreciation of past service. Gratuity can be accepted by either:
1. The employee himself at the time of retirement
2) Legal heir at the time of death of the employee
For the purpose of calculating income tax deduction for salaried employees receiving a gratuity, the employees can be divided into 3 categories, and then the exemption is granted depending on the department which is:
1. Employees and employees of government local authorities
2. Employees covered under the Payroll Act, 1972
3. Employees are not covered under any of the above two.
V. Receipt of income tax exemptionin VRS
The amount received or accepted by the employee by voluntary retirement under the Sonar Handshake Scheme will be waived under Section 10 (10C).
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7. Income tax deduction for perquisites
Some employers offer their employees various benefits/facilities like car, mobile phone, rent-free.
This kind of permission is not completely tax-free. A specified price of such benefits is allowed as a discount and the price of the approved balance benefits is allowed as a discount.
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Various other allowances such as transport allowance, child education allowance are also allowed as income tax exemption for salaried employees but only up to a certain limit.
Relevant points related to income tax exemption for salaried employees
1. The 7 most effective tax exemptions for salaried employees. However, there are various other discounts but not commonly used.
2) The above-mentioned income tax exemption is available only for salaried employees. However, there is other tax saving options available to all categories of taxpayers such as Benefit of Interest on Home Loan, Income Tax Exemption from Sec 80C to 80U, Capital Earnings Exemption under Section 54, etc.
