Download Automated Income Tax Preparation Software in Excel | Calculation of income tax for
employees of a private company in 2022: The annual CTC of a person working in a private company
consists of several components. These include LTA, HRA, pension fund contributions and tips,
entertainment reimbursements, phone bills, transportation, books and periodicals, and more. While the
names of CTC components may vary from company to company, the applicable tax rules remain the
same. For proper tax planning, it is important to understand the tax implications of the various
components of the CTC.
Here we look at how Tips, Reserve Fund, Rental Housing Allowance (HRA), LTA and Refunds are taxed.
Some components of wages are fully
taxable and some are completely exempt. Some components are partially exempt
from income tax.
Income Tax at HRA
HRA is an important part of the
CTC, providing tax credits to workers who live in rented housing. The HRA is
taxable if the employee does not live off the rent.
Subject to Section 10(13A), a minimum of the following may be exempt from tax:
(i) Actual amount received
(ii) 50% of salary if you reside in
metropolitan areas (ie Mumbai,
(iii) Rent above 10% of wages
Income tax refund
Companies provide various subsidies
for transportation, books and periodicals, entertainment, telephone and
internet, etc.
Under section 10(14) of the Income
Tax Law, subsidies given to employees are tax-deductible if such expenses are
actually incurred.
The transport discount is released
in the amount of the costs incurred.
Telephone/mobile and internet
reimbursements are also exempt from regulation 3(7)(ix) of the Income Tax Law.
Reimbursement for books and
periodicals may be claimed as an exemption under Section 10(14).
The entertainment allowance is
fully taxable in the case of private employees. However, this may be claimed as
an exemption if hospitality expenses are incurred for the company's business
purposes.
To receive tax credits for
reimbursement, employees must pay initial expense invoices.
Pension fund income tax
Contributions to the Reserve Fund
are deductible under section 80C of the Income Tax Act.
Income tax on tips
Bonus earned while working is fully
taxable. You can take advantage of the tip tax credit when you retire if your
employer is covered by the Tips Act. Under section 10(10) of the Income Tax
Law, at least the following persons are exempt:
one. Actual amount received
B. 20 thousand reais
h. 15 days' salary based on the
last salary withheld for each full year of service or part of it exceeding 6
months
For the calculation of
remuneration, salary means base salary + charity allowance.
If the employer is not subject to
the Free Payments Act, at least one of the following exceptions:
one. Actual amount received
B. RJU CAN'T. 20 00 000
h. Half of the monthly salary for
each full year of service. (i.e. ½ * average wage in the afternoon.
Income tax under LTA
The following conditions must be
met in order to apply for a travel allowance tax exemption:
One. The actual trip is carried out
by the taxpayer
B. Only domestic trips are counted
h. The exemption is granted to the employee alone or together with the family, including the employee's spouse, children, dependent parents, and siblings. However, the exemption does not apply to more than 2 children born after October 1, 1998.
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3)
Automated Calculation Income Tax House Rent Exemption U/s 10(13A)
4)
Individual Salary Structure as per the Private Concern’s Salary Pattern
5)
Individual Salary Sheet
6)
Individual Tax Computed Sheet
6)
Automated Income Tax Revised Form 16 Part A&B for the F.Y.2022-23
7)
Automated Income Tax Revised Form 16 Part B for the F.Y.2022-23
