Income tax advisor Kolkata SM Gupta. The Income Tax Act allows tax exemptions for salaried employees. It is quite effective in saving the taxes. The salaried employee must inform his employer about claiming the tax exemptions which are available as an option. Next, the employer will compute the tax on the balance income according to the income tax slab and deduct the TDS on the salary.
All these tasks can be burdensome, so most employees prefer hiring an income tax advisor in Kolkata for assistance.
The TDS deducted from the salary is reflected in Form 16 that the employer must give to all his employees. The deduction happens during the financial year. The employees can also download Form 26AS for the same requirement.
Income Tax Exemptions for Salaried People
1. HRA Exemption
Most companies offer their employees’ house rent or HRA. This allows them to reside comfortably in a good place. A portion of this rent is exempted from the levy of the Income Tax. The tax is only applied on the remaining part.
The HRA exemption is a valid tax exemption for salaried employees. You can claim it easily, and the exemption amount is large.
2. Leave Travel Allowance
Most employers give their employees special allowances to go on leaves and vacations. This amount of money is exempted from the taxes to a certain extent. However, certain terms and conditions are applicable. The tax exemption happens only if the employee goes on a vacation in India. This is because the company would ask for bills from the trip.
3. Encashment of Leaves
Most employers give their employees a certain number of days to claim as leaves. However, if you do not claim these leaves, it is an option for en-cashing, i.e. the employers will pay additional money to you for leaves that are still pending.
This amount is called leave encashment. It is allowed to be claimed under the tax exemptions up to a certain extent.
4. Pension Income
Upon employee retirement, most companies pay pensions to their employees. You might have to purchase an annuity to get the pension that the organisation pays. It is basically of two types – commuted and uncommuted. In the former, the amount of pension that you get is in a lump sum. In the latter, the company will pay you the money in instalments after you purchase the annuity.
Irrespective of whatever type it is, both fall under the tax exemption category to a certain limit.
For more detail, consult SM Gupta for professional tax advice and consultancy service.
193 replies on “Income Tax Exemptions for Salaried Employees”
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