What is Taxable

What  is  Taxable?  

 
Under  the  Income  Tax  Act,  1961  the  employer  is  required  to  deduct  tax  on  average  monthly  basis  from  
the  salary  paid  to  the  employees  and  deposit  the  same  in  to  the  Government  treasury  with  in  specified  
time.  All  components  of  payroll  are  generally  taxable  unless  specific  exemption  is  available.    The  taxability  
of  various  components  of  payroll  is  as  under:    
 
 
Basic        Fully  taxable  
 
HRA        Partly  taxable  -­‐  Note  1  
 
Special  Allowance        Fully  taxable  
 
Variable  Allowance        Fully  taxable  
 
Performance  Award        Fully  taxable  
 
Bonus        Fully  taxable  
 
Referrals          Fully  taxable  
 
Meal  Allowance        Fully  taxable  
 
Conveyance  Allowance   Transport  allowance  to  meet  expenditure  for  the  purpose  
of  commuting  between  residence  and  place  of  duty  is  
exempt  up  Rs  1600  per  month  
 
Medical  Reimbursement     Non-­‐taxable   for   reimbursement   of   expenditure   actually  
incurred   for   treatment   for   self   and   any   member   of   the  
family  subject  to  maximum  of  Rs  15000  per  annum  
 

 
Note  1:  
 
Lowest  of  the  following  are  exempt  from  HRA  under  section  10(13A):-­‐  
 
• Actual  HRA  received  
• Rent  paid  over  10%  of  salary  [Basic]  
• 50%  of  salary  [40%  in  case  of  Non-­‐Metros]  
 

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 What is Taxable
 
 
Deductions  chapter  VIA:-­‐  
 
 
The  employer  can  allow  the  following  deductions  from  salary  income  while  calculating  taxable  salary:-­‐  

Section   Particular  
   
80C   Major  items  covered  includes  under  this  section  as  below:  
   
• Provident  Fund  contribution  [Deduction    by  Employer]  
• Life  Insurance  premiums  [LIC  or  other  insurance  companies]  
• PPF  [SBI  or  some  nationalized  banks,  Post  office]  
• NSC  [Post  office]  
• ULIP    [UTI]  
• Payment  towards  children  education  [Tuition  fee  only  up  to  two  children]  
• Repayment  of  Principal  amount  on  Housing  Loan  to  any  Financial    Institution  (House  
should  be  complete)  
• Infrastructure  Bonds  like  ICICI  or  IDBI  or  specific  public  issues.  
• Pension  Fund  [LIC  or  other  insurance  companies]  
• Mutual  Fund  [Approved]  
• Fixed  deposits  for  a  period  over  5  years  under  specified  scheme.  
• Sukanya  Samridhi  Scheme    
Presently  overall  tax  saving  invest  is  limited  up  to  Rs.1,  50,000/-­‐  (Sec  80C).  
 

   
80CCC   Section  80CCC  of  Income  Tax  Act  deals  with  the  deductions  and  income  in  respect  of  
contributions  to  certain  Pension  funds  by  an  individual  assesses  Payment  of  
premium  for  annuity  plan  of  LIC  or  any  other  insurer.  Deduction  is  available  up  to  a  
maximum  of  Rs.  1,50,000/.  
 Note:  The  limit  of  Section  80CCC  will  be  part  of  the  overall  limit  prescribed      under  
Section  80CCE.  
 
   
80CCD(1B)   From  this  Financial  Year  an  additional  Deduction  in  respect  of  any  amount  paid,  of  up  to  Rs  
50,000  for  contributions  made  by  an  individual  assesses  under  the  NPS  
 

   
80D   • Mediclaim-­‐   for   Self,   Spouse   &   Children   up   to   Rs.   25,000   in   additional   to   that   the  
individual   can   claim   for   Rs.   25000   in   case   of   dependent   parents   covered   under  
policy  (Rs  30,000  parents  who  are  senior  citizen)  
• The   aggregate   payment   on   account   of   preventive   health   check-­‐up   of   self   ,Spouse  
,dependent  children,  father  and  mother  cannot  exceed  INR  5000/-­‐  
• It  can  be  done  through  different  Insurance  companies  
 
 
   
80DD   • Deduction   against   medical   treatment,   training   or   rehabilitation   of   handicap  

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 What is Taxable
dependent   or   deposit   of   any   amount   under   any   approved   scheme.   The   amount  
deductible  as  per  the  below  Condition.  
1. Rs.  75,000  (>=40%  and  <80%  Disability)  
2. Rs.  125000  (=80%  Disability)  
• Certificate  from  physician,  surgeon,  occultist  or  psychiatrist  working  in  a    
• Government  hospital  should  be  obtained.  
 
   
80DDB   • Deduction  against  medical  treatment  of  certain  specified  decease  or  ailment  for  self  
and   dependent   relative   which   age   is   below   60   years   (a   relative   who   is   not  
dependent   for   his   support   or   maintenance   on   any   person   other   than   the   assesse)  
up  to  Rs    40000  (Rs  60000  in  case  the  dependent  relative  is  a  senior  citizen  means  
age  is  above  60  years)-­‐    
• The  limit  of  deduction  of  up  to  Rs  80000,  for  the  expenditure  incurred  in  respect  of  
the  medical  treatment  of  a  “Very  Senior  Citizen”.      
• Certificate   in   the   prescribed   Form   from   specified   authority   to   be   obtained.   This  
deduction   shall   be   reduced   to   the   extent   of   claim   received   from   any   insurer   in  
respect  of  the  medical  treatment.  
 

   
80E   • This   is   applicable   for   education   loan   for   higher   education   of   self   or   spouse   or  
children  or  the  student  for  whom  the  person  is  the  legal  guardian    
• Deduction  is  available  for  interest  paid  for  the  first  8  years  or  until  the  interest  on  
loan  taken  for  higher  education  is  fully  paid,  whichever  is  earlier  
• Higher   education   means   any   course   of   study   pursued   after   passing   the   senior  
secondary  examination  from  any  board  school  or  university  
• Loan  availed  only  from  Bank  /  Financial  Institutions  
 
   
80G   • 50  %(  100%)  of  the  donation  to  certain  specified  bodies  are  allowed.    
• Employer   can       give   credit   under   this   clause   only   in   a   much   selected   cases   (PM  
National  Relief  Fund  etc).  
• From   the   F/Y   2017/18   in   this   section   also   include   donation   to   the   Swachh   Bharat  
kosh  and  Clean  Ganga  Fund.  
 
   
80U   • A   person   suffering   from   a   permanent   physical   disability   or   mental   retardation   is  
eligible   for   deduction   on   the   production   of   medical   certificate   from   Government  
Hospital  in  Form  10  IA.    
Where  condition  of  disability  requires  reassessment,  fresh  certificate  to  be  obtained  
after   its   expiry   to   continue   claiming   the   deduction.   The   amount   deductible   as   per  
the  below  Condition  
1. INR  75,000  (>=40%  and  <80%  disability)  
2. Rs.  1,25,000  (>=80%  disability)  
 
   
80CCG   • Tax  Benefits  of  Rajiv  Gandhi  Equity  Savings  Scheme  (RGESS)  under  section  80CCG  
has   been   withdrawn.   However,   if   you   have   claimed   this   deduction   in   current   FY  
2016-­‐17,  you  can  claim  the  deduction  for  the  next  two  Financial  Years  too.  
• Section   80CCG   provides   deduction   in   respect   of   investment   made   under   notified  

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 What is Taxable
equity  saving  scheme.  The  amount  of  deduction  is  50%  of  amount  invested  in  equity  
shares   or   listed   units   of   equity   oriented   mutual   fund.   However,   the   amount   of  
deduction  under  this  provision  cannot  exceed  INR  25,000.  
• The  deduction  under  this  section  is  available  if  the  following  conditions  are  satisfied  
1. The   person   is   a   resident   individual   (may   be   ordinarily   resident   or   not  
ordinarily  resident  
2. His  Gross  total  income  does  not  exceed  INR  12,00,000  (w.e.f  the  Financial  
Year  2016-­‐17).  
3. He   has   acquired   listed   shares   or   listed   units   of   an   equity   oriented   mutual  
fund  in  accordance  with  a  notified  scheme.  
4. The   person   is   a   new   retail   investor   as   specified   in   the   above   notified  
scheme.  
5. The   investment   is   locked-­‐in   for   a   period   of   3   years   from   the   date   of  
acquisition  in  accordance  with  the  above  scheme.  
 
Income  tax  Rate  for  Financial  Year  2017-­‐18  [A/Y  2018-­‐19]  
 
On  Income  up  to  Rs.  2,50,000                            NIL    

    Rebate   of   Rs.   2500/-­‐   or   actual   tax   payable  

On   Income   over   Rs.   2,50,001   but     whichever  is  less  for  
up  to  Rs.  5,00,000                            5%   resident  individuals  with  total  income  
Up  to  Rs.  3,  50,000/-­‐  U/S-­‐87A.  
On   Income   in   excess   of   Rs.                    
5,00,001  but  up  to  Rs.  10,00,000                            20%  

                             
On   Income   in   excess   of   Rs.                            30%  
10,00,001  
 
 
Notes:-­‐  
1. For  Senior  citizen  taxpayers,  initial  income  of  Rs.3,00,000  is  exempt.  
2. For  Super  Senior  citizen  taxpayers,  initial  income  of  Rs.5,00,000  is  Exempt.  
3. Surcharge  is  applicable  @  10%  of  income  tax,  where  total  income  is  between  Rs.  50  lakhs  and  Rs.1  crore  
and  15%  of  income  tax,  where  total  income  exceeds  Rs.  1  crore.        
4. Education  Cess  of  3%  payable  
 
Note   on   setting   off   the   loss   under   the   head   “Income   from   house   property   “Against  
salary  income”  under  section  24(B)  
 
Under  the  Income  Tax  Act,  loss  under  the  head  Income  from  house  property  may  be  incurred  under  the  
following  circumstances.  
 
Tax  benefit  on  loan  repayment  of  second  house  will  be  restricted  to  Rs  2  lakh  per  annum  only  (even  if  you  
have   multiple   house   the   limit   is   still   going   to   be   Rs   2   Lakh   only   and   the   ceiling   limit   is   not   per   house  
property).  

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