We are going to discuss on “Income Tax calculations on Salaries and other income for the Assessment Year

2024-25 relevant to the financial year 2023-24”

Earnings from April 1, 2023 to March 31, 2024 are calculated for arriving at income tax liability.

The 5 heads of income tax are:

Income from salary.
Income from house property.
Income from profits and gains from business or profession.
Income from capital gains.
Income from other sources.

In case of Resident Taxpayer all his income would be taxable in India, irrespective of the fact that income is
earned or has accrued to taxpayer outside India.

However, in case of non-resident all income which accrues or arises outside India would not be taxable in India

(1) An individual is said to be resident in India in any previous year, if he—

(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ;
or

(b) having within the four years preceding that year been in India for a period or periods amounting in all to
three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or
more in that year.
 Tax incidence in case of Non-residents

 Nature of income Taxability in the hands of Non-resident

 Income which accrues or arises in India Taxed
 Income which is deemed to accrue or arise in India Taxed
 Income which is received in India Taxed
 Income which is deemed to be received in India Taxed
 Income accruing outside India from a business controlled from India or from a profession set up in India
Not taxed
 Income other than above (income which has no relation with India) Not taxed

We are going to discuss income tax on salary in our videos.

There are two regimes of income tax calculation:

Old Regime:

Tax rate is slightly higher with lots of exemption.

New Regime
புதிய வரி முறையின் வரிவிதிப்பு

Tax rate is slightly lower but no exemption except pension fund etc.
And simple to calculate.

For Individual (resident or non-resident) less than 60 years of age anytime during the previous year:
Old Tax Regime

Income Tax Slab Income Tax Rate

Up to ₹ 2,50,000 Nil

₹ 2,50,001 - ₹ 5,00,000 5% above ₹ 2,50,000

₹ 12,500 + 20%
₹ 5,00,001 - ₹ 10,00,000
above ₹ 5,00,000

₹ 1,12,500 + 30%
Above ₹ 10,00,000
above ₹ 10,00,000

Tax slab of New Tax Regime

Tax Slab Rates

Up to Rs. 3,00,000 NIL

Rs. 300,000 to Rs. 6,00,000 5% on income which exceeds Rs 3,00,000

 Rs. 6,00,000 to Rs. 900,000 Rs 15,000 + 10% on income more than Rs 6,00,000

Rs. 9,00,000 to Rs. 12,00,000 Rs 45,000 + 15% on income more than Rs 9,00,000

Rs. 12,00,000 to Rs. 1500,000 Rs 90,000 + 20% on income more than Rs 12,00,000

Above Rs. 15,00,000 Rs 150,000 + 30% on income more than Rs 15,00,000

Why an Option to Choose is Given?

Under the new regime of taxation, the taxpayers can opt for one of the following-

To pay tax at lower rates according to the new regime of taxation subject to foregoing specific exemptions
(permissible) and deductions under income tax.

To continue paying the taxes under the existing income tax rates. The taxpayer can avail of exemptions and
rebates by opting into the old regime and paying tax at the existing higher rate.

A salaried person can change the option if so wishes.

Some of the common deductions & exemptions not allowed under the new regime are-

Leave Travel Allowance

Conveyance allowance
House Rent Allowance
Relocation allowance
Children education allowance
Professional tax
Daily expenses in the course of employment
Deduction under Chapter VI-A deduction (80C,80D, 80E etc.)
(Except Section 80 CCD(2))
Standard Deduction on salary
Interest on housing loan (Section 24)
Other special allowances (Section 10(14))

Common Deductions that are Allowed under New Tax Rate Regime

Investment in Notified Pension Scheme under section 80CCD(2)

Conveyance allowance for expenditure incurred for travelling to work

Any allowance for travelling for employment or on transfer

Transport allowance for specially-abled people

There are more than 50 items of exempted income including

Income of Non-Indians
Income received from International Organization such as United Nations etc.

Section 10(1)

Income earned through agricultural means

Section 10(2)

Any amount received by an individual through a coparcener from an HUF

Section 10(2A)

Income received by partners of a firm, as shared between them

Section 10(5)

Concession on travel given to an employee who is also a citizen of India

Section 10(7)

Allowances received by government employees stationed abroad

Section 10(10)
Gratuity Up to 20 Lakhs

Section 10(10A)

The commuted value of the pension earned by an individual

Section 10(10AA)

Any amount earned via encashment of leave at the time of retirement – For private employees, the maximum
limit is INR 25 lakhs

Section 10(10B)

Compensation paid to workers due to relocation – Transfer grant etc.

Section 10(10BC)

Any compensation obtained in the event of a disaster

Section 10(10D)

Any amount acquired via a Life insurance policy

Section 10(11)

Any payment received via the Statutory Provident Fund

Section 10(13)

Any payment received through a Superannuation Fund

Section 10(13A)

House Rent Allowance subject to certain conditions

Section 10(19)

Income received by family members of the armed forces in the form of pension due to death of Personnel while
in duty.

Remote Locality Allowance – exempt up to Rs.1300 pm

Special Compensatory (Hill Area) Allowance – exempt from Rs.300 to Rs.7000/-

Tribal Area Allowance – exempt Rs.200 pm

For Armed Forces some more allowances are exempt.

House Rent Allowance

Least of the following is exempt:

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission

Note:

i. Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent

ii. It is mandatory for employee to report PAN of the landlord to the employer if the annual rent paid is more than
Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October, 2013].

Calculate your Gross Income

The following are the steps to calculate income tax liability

The gross salary all components of salary including House Rent Allowance (HRA), Leave Travel Allowance
(LTA), and Special Allowance, such as mobile reimbursements and food coupons etc.

Deduct the exemptions from the total salary.

HRA can be claimed only by submission of valid rent receipts as proof in case one lives in a rented house.

The lowest of the following amount is calculated as tax exemption under HRA:

Actual rent paid minus 10 % of the basic monthly salary

Employer provides the HRA
If the taxpayer is living in a metro city, 50% of the basic salary
If the taxpayer is living in a non-metro city, 40% of the basic salary

Deduct: Tax on Employment (Professional Tax)

Entertainment Allowance up to Rs.5000/-

The amount arrived at is Income chargeable to tax under the Head Salaries.

Income from House Property:

COMPUTATION OF ANNUAL VALUE is done in the following steps:

(i) GROSS ANNUAL VALUE (G.A.V.) is the highest of

(a) Actual rent received or receivable.

(b) Reasonable or expected market rent.

It may be noted that if the let-out property was vacant for whole or any part of the previous year and due to such
vacancy the actual rent received or receivable is less than the reasonable market rent, then the amount actually
received /receivable shall be taken as the G.A.V.

(ii) ANNUAL VALUE (A.V.) is the G.A.V. minus the municipal taxes paid by the owner, provided that the municipal
taxes were actually paid during the year.

• In case of self-occupied properties, the A.V. is taken as NIL for two self-occupied properties at the option of the
assessee. The other self-occupied properties are deemed to be let out.

3. INCOME FROM HOUSE PROPERTY is the A.V. minus the following deductions only.

(a) A sum equal to 30% of the Annual Value as computed above in case of let out property. In case of self-
occupied property, since the A.V. is taken at NIL, 30% deduction is not allowed on it.

(b) Interest on money borrowed for acquisition/construction/ repair/ renovation of let out property is deductible
on accrual basis, as below:

(i) For Property having A.V. =NIL

• For loans taken for acquiring or construction a house, a total interest is deductible up to a maximum of Rs.
2,00,000/-
• For all loans taken for renovation of existing house, a maximum of Rs.30,000 is deductible for payment of
interest per year.

• For loan taken for construction, total deduction available to the taxpayer on account of interest payable prior to
the year of acquiring or construction, 20% (of the total interest) for each year, for 5 years starting
from the year of acquiring or construction can also be deducted.
(The maximum deduction allowable under (i) Above is Rs. 2 lakhs)

(ii) For all other properties:

In case of a let-out property, the taxpayer can claim deduction on account of interest on loan taken for the
purpose of purchase, construction, repair, renewal or reconstruction of the property without any ceiling subject to
carrying over unadjusted interest beyond Rs.2,00,000 for a period up to 8 years.

Calculations of Income from House property

Type of House Property Self-Occupied Property Let Out Property

Gross Annual Value Nil XXX

Less: Municipal Taxes/ Taxes paid to local Not Applicable XXX
authorities Nil XXX
Standard Deduction Not applicable 30% of NAV
Less: Deductions under section 24 Limit to Rs 2 Lakh per annum No limit
XXX XXX

 Standard Deduction
 Interest paid on Home Loan

Income from House property

Add other income reported by employee to calculate the gross total income

(Family Pension, Dividend, interest, winning of lotteries etc. are part of income from other sources)

Deductions under Chapter VI-A

Interest on Savings Bank of exempted up to Rs.10,000/- under Sec.80TTA for person below 60 years of age.

Interest on Savings Bank of exempted up to Rs.50,000/- under Sec.80TTB for person of or above 60 years of
age.

80C: This is one of the most popular and availed sections under chapter VI A. It allows the most tax deductions
of ₹1.5 lakh when clubbed with Sections 80CCC and 80CCD(1).

Here's the list of expenditures and investments that can be claimed for deductions under 80 C of chapter VI A:
Employee Provident Fund (EPF) & Voluntary Provident Fund (VPF)
Public Provident Fund (PPF)
Life Insurance Policy Premia
Contribution to National Pension System (NPS)
Payment of Tuition Fees
Unit Linked Insurance Plan (ULIP)
Five-Year Tax Saver FDs
Sukanya Samriddhi Yojana
Equity Linked Savings Scheme (ELSS)
National Savings Certificate (NSC)
Senior Citizen Savings Scheme (SCSS)
Five-Year Post Office Time Deposit (POTD) Scheme
Home Loan Principal Repayment

80CCC: The section of chapter VI A is responsible for deductions made against contributions to pension
schemes. Clubbed with 80C and 80CCD (1), the deduction limit is ₹1.5 lakh.

80CCD (1): Contributions made to the central government's pensions funds are eligible for deductions under the
section. The deduction limit under it is ₹1.5 lakh. If you are an employee, 10% of your basic salary and dearness
allowance will be exempt from tax. In any other case, 20% of total income will be tax-free, but the limit remains
the same.

80CCD (1B): Deductions under chapter VI A for this sub-section of 80CCD are considered for pension scheme
self National Pension System (NPS)/NPS Swavalamban and Atal Pension Yojana. The tax exemption, in this
case, is limited to ₹50,000.
80CCD (2): This section also deals with tax deductions related to corporate NPS and central/state government
NPS subscribers. The tax benefit is 14% of basic + DA (dearness allowance) if the employer is the central
government. In case of corporate NPS subscriber, this tax benefit is limited to 10% of basic + DA. The tax benefit
of this sub-section of the Income Tax Act is over and above the Rs. 2 lakh overall limit offered by NPS u/s 80 C
and 80 CCD(1B)

80D: Chapter VI A deductions under this section are made on health insurance premiums and premium paid for
critical illness rider of life insurance policies. The max tax deduction limit under Section 80D is ₹1 lakh for a
senior citizen paying health insurance premium for self and parents. A premium of up to ₹25,000 qualifies for
deductions if you are a normal taxpayer. It is ₹50,000 for self and family if you are a senior citizen.

80DD: The section deals with deductions on maintenance that includes medical treatment of a dependent who is
a person with a disability. The deduction limit under it is set as ₹75,000.

80DDB: Expenses made on medical treatment from an oncologist, neurologist, urologist, haematologist,
immunologist, or any other specialist are covered under this section for deductions under chapter VI A. The
deductions limit is ₹40,000.

80E: There is no upper limit on deductions in this section. Section 80E tax benefits apply to interest payments
made towards education loans taken for higher education.

80EE: This applies to loans taken for purchases residential house property and sanctioned between 1st April
2016 to 31st March 2017. Chapter VI A dictates that the upper limit for deductions here is ₹50,000. However, this
benefit can only be availed by a first time home buyer purchasing an affordable housing property.
80EEB: The section applies to purchasing an electric vehicle via a loan. The deduction is given on interest, and
the maximum limit is ₹1.5 lakh.

80G: It deals with donations to funds or charitable institutions. The nature of the doner determines the deduction
limit. It may be up to 100% of the donated amount.

80GG: The maximum deduction limit here is ₹5,000 per monthly or 25% of total yearly income, whichever is
less. This Chapter VI A deduction applies to salaried individuals who do not have a House Rent Allowance salary
component.

80GGA: The complete amount donated for scientific research or rural development can be claimed for
deductions under this section of chapter VI A.

80GGC: The non-cash donations made to political parties qualify for deductions under this section. The
deduction allowed under it is 100%.

80TTA: The maximum amount that can be claimed under this deduction of chapter VI A is ₹10,000. The section
applies to interest on saving bank accounts. The limit doesn't apply to senior citizens.

80TTB: This tax benefit is available only to senior citizens, and tax deduction of ₹50,000 annually can be
claimed under it.

80TTB: is also applicable to interest on savings and fixed deposit accounts held with banks or India Post Office.

80U: This is relevant for people with disability. The deduction amount varies with the kind of disability. The overall
limit under this Chapter VI A deduction is ₹1.25 lakh annually.
After deductions under Chapter VI-A have been made, the remaining income amount is Taxable Income.

Tax is calculated based on tax slab:

Rebate can be claimed on receipt of salary arrear under Section 89(1) under which tax relief is provided by
recalculating tax for the year in which arrears are received and the year to which the arrears pertain; and the
taxes are adjusted in the year in which they were due. It must be noted that Form 10E has to be filed before
filing the income tax return.

Net income tax payable

Add: Education Cess at 4% on the total tax payable

Less: Income tax already paid.

To be paid IT.

Instalment Advance Tax Due Date Tax to be Paid

First Instalment 15th June 15% of tax liability

Second Instalment 15th September 45% of tax liability

Third Instalment 15th December 75% of tax liability

Fourth Instalment 15th March 100% tax liability

Last date for filing income tax return by salaried class 31st July of the Assessment Year.
At the time of filing, if the pending income tax is up to Rs.10,000/-, no additional interest is charged.

Before filing income tax return, Check Annual Information Statement and Taxpayer Information Summary in e-
filing portal of the Income Tax Department in order to ensure that no income which is reflected in the AIS is
missed out in our return. In case of any income missed out from our return, notice from Income Tax Department
is likely to be issued seeking clarification/filing of revised return.