Know What Is Taxed And What Not Of Your Salary

Posted By:
Subscribe to GoodReturns

As a salaried class, you know of the CTC that you earn but the Income tax notes income from salary for computing your gross taxable income on which your tax outgo shall be decided for the relevant financial year.

Know What Is Taxed And What Not Of Your Salary

But while CTC is a broader figure, here is provided what all attracts tax liability of the different components included in this bracket.

Generally speaking CTC or cost to company is all the direct cost incurred by the company on its employee and comprises basic salary, HRA, special allowances, bonus, employer's contribution to EPF, gratuity, conveyance, medical allowance, meal coupons etc.

So, one by one we will here take note of what is taxable and what is not out of your total earnings:

Non-taxable components

1. EPF contribution by the employer
2. Grautity contribution by the employer
3. HRA
4. Food coupon upto Rs. 26,400 in a year

Taxable components or figures that are taken for the head Income from salary while filing ITR and computing tax liability are as below:

1. Basic salary: 100% taxable component and roughly make's up 30-50% of one's salary. All other components are provided on the basis of this base or basic salary.

2. HRA or housing rent allowance: Depending on the work location, employer provides for the employees' accommodation expenses as HRA. This is exempt from tax as under

i) Upto the amount specified in the salary slip.
ii) 40% of basic pay
iii) Actual rent less of 10% of basic

3. Bonus and special allowance: It is also 100% taxable component of your salary that is given to promote employee performance.

4. LTA or leave travel allowance: It is exempt to a maximum of two trips made by you in four calendar years. Also, it covers only the travelling expenses with proof required in lieu of the same.

Goodreturns.in

Story first published: Saturday, April 21, 2018, 15:34 [IST]
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Find IFSC

Get Latest News alerts from Goodreturns