A salary is a set amount of cash or remuneration that a company pays to employees for work done while they are employed.
Aside from the base income, other benefits are either fully or partially taxed. Salaried people receive Form 16, which details their earnings and taxes paid in advance. There are also tax-saving choices under various deductions such as sec.80c-eligible investments, charitable donations, etc.
Form 16 is a document that includes all of the information you'll need to finish and file your tax return. It displays the salary income breakdown and the TDS deducted by the employer. The entire thing comprises two parts: Part A and Part B.
Form 26AS summarizes taxes deducted and taxes paid on your behalf. This information is available on the Income-tax department website.
It indicates the amount of tax deducted on your behalf by deductors, as well as the amount of tax deposited by deductors and the amount of tax credit available to the deductee. If the tax liability of the deductee is less than the TDS amount, then the excess amount is a refund claim by the deductee.
Salary amount received by the employee before any amount is added or payments deducted. Basic salary excludes overtime charges, Bonus and other compensation received from the employer.
This is a fixed income component that serves as the foundation for the rest of your salary, hence the name. It usually accounts for a significant amount of your entire payment. The HRA is calculated as a proportion of the Basic Salary. PF is deducted at a rate of 12% of your basic salary.
Your company deducts taxes from your pay and deposits them to the government on your behalf. It's known as TDS. TDS stands for tax withheld at source. Every month, your company deducts a percentage of your wage and pays it to the government on your behalf.Your employer calculates how much TDS must be deducted from your monthly salary based on your overall salary for the year and your investments in tax-saving schemes.
Around June or July, your employer will provide you with a TDS certificate, also known as Form 16, which will show you how much tax was deducted each month.
House Rent Allowance (HRA): Salaried individuals who reside in a rented home or apartment can claim HRA to reduce their taxes. This can be tax-free in part or whole. The allowance is for expenses associated with rental housing.Note that your HRA is wholly taxed if you receive HRA but do not reside in a rental unit.
1. Old scheme
| For Individual (For age below 60 years) | Senior citizen age of 60 years or more but below 80 years | Senior citizen of 80 years or more | ||||||
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2. New Scheme u/s 115 BAC
| Total Income (Rs.) | Tax rate |
|---|---|
| Up to Rs.2,50,000 | Nil |
| Rs.2,50,001– Rs.5,00,000 | 5% |
| Rs.5,00,001– Rs.7,50,001 | 10% |
| Rs.7,50,001–Rs.10,00,000 | 15% |
| Rs.10,00,001–Rs.12,50,000 | 20% |
| Rs.12,50,001–Rs.15,00,000 | 25% |
| Morethan 15,00,000 | 30% |
| Total Income (Rs.) | Surcharge |
|---|---|
| Up to Rs.50,00,000 | Nil |
| Rs.50,00,001– Rs.1,00,00,000 | 10% |
| Rs.1,00,00,001– Rs.2,00,00,000 | 15% |
| Rs.2,00,00,001– Rs.5,00,00,000 | 25% |
| More than Rs.5,00,00,000 | 37% |
• Marginal relief is available if the tax payable, including the surcharge, is more than the excess income over the limit.
