Income Tax Calculation
Income tax is calculated on the gross salary. In CTC, we use to add all the reimbursements. On Reimbursements like Medical, LTA, Driver Salary, Petrol etc, if the employee would provide the bills, it will be tax exempted.All unclaimed amount will be paid by the end of the financial year i.e. with the March salary after deduction the Tax.
Bonus, Ex-gratia, Variable Pay are coming under the taxable salary.
HRA ( In Metro) 50% of the basic would be tax exempted provided the employee has to produce the rent receipt. Conveyance Allowance - Rs 800/- monthly would be tax free.
Is tax from all my accounts?
In India, we have Tax Deduction at Source (TDS), which means that Tax is applicable at the source of your income. So if you are working, then tax is applicable to your salary account only.
Income Tax Rates for FY 2008-09:
I) For any guy in India
| Total Income Range | Tax Rates | Surcharge | Education Cess (% of I.T) | Secondary and Higher Education Cess |
| Upto Rs.1,50,000/- | Nil | Nil | Nil | Nil |
| Rs.1,50,001- Rs. 3,00,000 | 10% of the amount by which the total Income exceeds Rs.1,50,000 | Nil | 2% | 1% |
| Rs.3,00,001- Rs. 5,00,000 | Rs.15,000 + 20%of amount by which the total Income exceeds Rs.3,00,000 | Nil | 2% | 1% |
| Above Rs. 5,00,000 | Rs.55,000 + 30% of amount by which the total Income exceeds Rs.5,00,000 | Nil | 2% | 1% |
It means that a person having a gross salary of upto Rs 1,50,000 is exempted from tax.
In a Financial year, an individual can show a saving of Rs 1,00,00 only to save Tax. It can be Govt Tax saving Bonds of 5 year term, Medical Insurance, Mutual funds, Life Insurance, ULIP Plans, Home Loan etc but it does not include Gold and Stocks
(II) In case of resident women below 65 years of age.
| Total Income Range | Tax Rates | Surcharge | Education Cess (% of I.T) | Secondary and Higher Education Cess | |||
| Upto Rs.1,80,000/- | Nil | Nil | Nil | Nil | |||
| Rs.1,80,001- Rs. 3,00,000 | 10% of the amount by which the total Income exceeds Rs. Rs.1,80,000 | Nil | 2% | 1% | |||
| Rs.3,00,001- Rs. 5,00,000 | Rs.12,000 + 20% of amount by which the total Income exceeds Rs.3,00,000 | Nil | 2% | 1% | |||
| Above Rs. 5,00,000 | Rs.52,000 +30% of amount by which the total Income exceeds Rs.5,00,000 | Nil | 2% | 1% |
| It means that a woman having a gross salary of upto Rs 1,80,000 is exempted from tax. Same goes for a women too in terms of saving in a financial year. Tax Calculation Suppose a guy has a gross salary of Rs 3,80,000 ; lets calculate how much tax he has to pay in a financial year. In a financial year, one has to declare his Income at the start of his work - say after 2/3 months of joining in a Company. Suppose he declares an investment of Rs 1 Lacs, be it of any distribution like ... Govt Bonds Rs 30,000 Mutual Funds Rs 60,000 Insurance Rs 10,000 Then his tax liability becomes 3,80,000 - 1,00,000 = 2,80,000 On that, tax is levied only when the amount is above Rs 1,50,000 Hence the amount which is taxable is 2,80,000 - 1,50,000 = 1,30,000 Therefore income tax payable = 10% of 1,30,000 = 13,000 Above that Education Cess (% of I.T) = 2% of 13,000 = 260 and Secondary and Higher Education Cess = 1% of 13,000 = 130 Total tax payable = 13,000+260+130 = Rs 13,390 in that financial year. Isnt that simple? Hope you can calculate yours now :) |
