Find out about the calculation of income tax 2022-23 for employees. Know the income tax rules for
taxing all components of a CTC or gross salary. The remuneration components mainly consist of:
1) Basic salary
The base salary is always fully
taxed.
2) Calculation of income tax - HRA
If a taxpayer receives the Rental
Allowance (HRA) and pays the rent for a dwelling, then he can apply for an
exemption under section 10 [13A] subject to the lesser of the following
limitations mentioned, or he can be claimed a minimum of the following amounts
as exempt from tax:
(i) Actual amount received
(ii) 50% of the salary if you live
in big cities (eg Mumbai,
(iii) Rent exceeding 10% of salary
For the purposes of calculating the
exempt HRA amount, Salary will mean the base salary plus the depreciation
allowance [if part of the retirement benefits] and the commission earned on the
basis of turnover.
NOTE. If a taxpayer who receives
the HRA fails to pay the rent, the full amount of the HRA will be taxed.
3) Variable payment
Variable remuneration is part of
the remuneration, usually determined by the worker's performance and entirely
taxable. Reimbursement (travel expenses, books and newspapers/periodicals,
mobile communications, entertainment, etc.)
Pursuant to section 10 (14) of the
Information Technology Act, benefits awarded to employees for employment
purposes are exempt from tax provided that such expenses are actually incurred
by the employees. The employee must have the required invoices and supporting
documents as proof to apply for the exemption.
Therefore, the transport allowance
is released for the amount of the costs incurred.
Similarly, the refund of
books/newspapers and periodicals may be claimed as an exemption under paragraph
10 (14), while the refund of a mobile phone is exempt under rule 3 (7) (ix) of
the Computing Rules.
The entertainment allowance, on the
other hand, is entirely taxable in the case of private employees. If this
representation allowance is granted to employees for the reimbursement of the
reception costs of corporate customers, or for commercial purposes, it can be
requested as an exception pursuant to paragraph 10, paragraph 14, of the IT
law.
4) Leave travel allowance (LTA)
To be eligible for holiday
allowance/holiday exemption under Article 10 (5), the taxpayer must meet the
following specific conditions:
I. The actual trip is made by the
taxpayer
II. Only domestic trips are
considered for this exemption.
III. The exemption is granted to
the employee alone or together with the family member, the family unit includes
the employee's spouse, children, dependent parents, brothers and sisters.
However, the exemption does not apply to more than 2 children born after 1 October
1998. This restriction does not apply to subsequent cases of multiple births
for the second time after the birth of a child.
IV. The LTA exemption is allowed no
more than 2 times, i.e. for 2 trips within 4 calendar years (2022-2025). The
amount of the exemption varies depending on the mode of travel. For example, in
the case of air travel, lower actual costs or economy class fares will be
allowed.
Download Auto-Fill Income Tax Revised Form 16 Part B for the F.Y.2021-22[This Excel
Utility can prepare at a time 50 employees Form 16 Part B]
5) Bonus
The bonus is fully taxable
6) Calculation of income tax - Tips
Any tips received while on the job
are fully tax deductible. However, retirement benefits will be subject to
taxation depending on whether the employer is subject to the Remuneration Act
or not.
If the employer is subject to the
pay law, the lesser of the following are exempt from the rules u / s 10 (10) of the IT law:
I. Actual amount received
II. Rupees 20 00 000
III. 15-day salary based on the
last salary received for each year of service completed, or part thereof,
exceeding 6 months (i.e. 15/26 * pm salary * number of years of service
completed)
For the purposes of the above
calculations, salary means the basic salary in the afternoon. plus off-road
allowance.
If the employer is not subject to
the Remuneration Act, the minor of the following is exempted
I. Actual amount received
II. Rupees 20 00 000
III. Half monthly salary for each
year of work. (ie ½ * Average salary per day * Number of years after the end of
service) Any part of a year is not taken into account in the calculation of
full years.
NOTE. For the purposes of the above calculation, the average wage in the afternoon. it will mean the average base salary for the last 10 months plus the off-road allowance [if it is part of retirement benefits] for the last 10 months and the average commission earned based on the turnover of the last 10 months.
Feature of this Excel
Utility:-
1) This
Excel Utility Prepare Your Income Tax as per your option U/s 115BAC perfectly.
2) This
Excel Utility has the all amended Income Tax Section as per Budget 2021
3)
Automated Income Tax Form 12 BA
4)
Automated Calculation Income Tax House Rent Exemption U/s 10(13A)
5)
Individual Salary Structure as per the Non-Govt(Private) Concern’s Salary
Pattern
6)
Individual Salary Sheet
7)
Individual Tax Computed Sheet
8)
Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22
9)
Automated Income Tax Revised Form 16 Part B for the F.Y.2021-22
10)
Automatic Convert the amount into the in-words without any Excel Formula
