TAXABLE AND NON-TAXABLE ALLOWANCES

 

Taxable and Non-Taxable

TAXABLE AND NON-TAXABLE ALLOWANCES

Income tax

1. HRA (House Rent Allowance)

Least of the following is exempted from HRA Received

1)HRA received

2)House rent paid minimum 10% of salary(salary means basic plus DP + DA if term of employment so provides)

- 50% of salary (same meaning as above) in case of rented house situated in Bombay, Madras, Delhi or Calcutta.

-40% of salary, if rented house situated in any other places.

• Dearness Allowance(DA): Dearness Allowance of DA is mostly received by Government employees.However it is fully Taxable for every salaried tax payer irrespective of whether he/she is government or non-government employee.
• Transport Allowance :
  Transport Allowance exemption for A.Y.2018-19(F.Y. 2017-18):

  Persons	Monthly Tax Exemption(Rs/month)	Yearly Tax Exemption(Rs./Year)
  Salaried persons(Non-Handicapped, on-Transport)	Rs.1600/-	Rs.19,200/-
  Handicapped Persons(Salaried)	Rs.3,200/-	Rs.38,400/-
  Employee of Transport System	70% of amount received or 10,000 whichever is less	70% of amount received or 1,20,000 whichever is less.

- City compensatory Allowance: Fully Taxable.

- Foreign Allowance: Exempt from IT if paid outside India By the government for services outside India.

-Fixed Medical Allowance: Taxable.

-Project Allowance: Taxable.

-Transport Allowance: Exempted to 800 Per Month maximum.

-Tiffin Allowance: Taxable.

-Allowance to meet the cost of Travel on tour or on Transfer: exempted to the extent allowances used for said purpose.

-Daily Allowance(DA or Daily Allowance in TA bill to meet the ordinary daily charges on account of absence from his normal place of duty) : Exempted to the extent allowance used for the said purpose.

-Uniform allowance: exempted to the extent used for the said purpose.

-Child Education Allowance: Rs.100 per month per child up to maximum of two child is exempted if expenses made in India.

- Children hostel Allowances: Rs.300 per month per child upto maximum of two child is exempted if expenses made in India.

-many hilly area, remote area, field allowances are exempted on various rate.

-Any other Allowances : generally Taxable.

A complete list of tax deductions you can claim under the Income Tax Act, this financial Year 2018-19.

Section 80C-Investments

You can claim deduction under Section 80C.

-Provident Fund.

-Public Provident Fund.

-National Pension System.

-Payment mode towards Children’s tuition.

-Life insurance premium etc. Offer tax benefit under this section.

                Section 80CCD – Government Pension Scheme

                -Under this section, you can claim deduction for contribution made towards   
                  National Pension Scheme.

-Section 80CCD (1) – Employee’s Contribution.

               * If you are an employee: Maximum deduction allowed is 10% of your salary.

                * If you are self-employed: Maximum deduction is allowed is 20% of your gross
                   total income.

- Section 80CCD(2) – Employee’s Contribution.

                * An additional deduction up to 10% of the salary of the employee, towards  
                    contribution made to employee’s pension fund. No financial limit exists on this  
                   deduction.

-Section 80CCG – Equity Investments.

                * The Rajiv Gandhi Equity Savings Scheme deduction aims to encourage
                  investment  in equity shares. Under Section 80CCG, you can Claim a tax
                   deduction of Rs.25,000, or up to 50% of the amount Invested in equity shares,
                   whichever is lower.

                * Rajiv Gandhi Equity Savings Scheme has been discontinued w.e.f.Apr 2017. No
                   deductions shall be available u/s 80CCG AY 2018-19 onwards. Those who
                   invested under this Scheme in FY 2016-17 will be able to claim the Tax  
                   deduction until AY 2019-20.

- Section 80D – Health Insurance.

                * Tax benefit u/s 80D Rs.50,000 shall be available for senior citizens.

                * If you pay Premium for a Health Insurance, On behalf of your parents, an
                   additional deduction of up to Rs.20,000(Rs.50,000(less) Rs.30,000) shall be
                   available. If you fall under the tax bracket of 30%, you shall be eligible for an
                   additional Tax benefit of up to Rs.6,000(30% of 20,000).

                * In case of Senior citizens (aged above 80 years) who are uninsured, a medical
                   expense of up to Rs.30,000 shall be allowed as deduction.

- Section 80DDB – Critical illness

                * Under section 80DDB tax deduction of Rs.40,000 is available, for medical
                    treatment of specified ailments, for individual below 60 years of age. These
                    specified ailments includes AIDS,Cancer, Thalassaemia, etc.

                * Rule 11DD has the list of these specified ailments. A certificate from a registered
                    doctor, in Form 10l will have to be furnished.

                * Tax exemption on treatment expense of specified critical illness was Rs. 60,000
                   for senior Citizens and Rs.80,000 for very Senior Citizens. This limit has been
                    proposed to be increased to Rs.1,00,000 for all Senior citizens.

                * If and expenditure has been incurred by you for treatment of your Senior citizen
                   Parents, for a specified ailment, an additional tax deduction Of Rs.40,000 can be
                   claimed.

-Section 80TTA – Savings Account.

                *Interest earned on Savings Account in post office, bank, or cooperative society,
                    shall be exempted up to Rs.10,000.

                *Interest earned from this account will have to be included in other Income.
                   Deduction claimed will have to be on the total interest earned or Rs.10,000,
                    whichever is less. This benefit is available for an individual and a HUF.

                * This tax benefit is not allowed on the interest earned via Recurring Deposit, Fixed
                    Medical Deposits, or corporate Bonds.

-Section 80GG – HRA.

                *If you are residing in a rented house , HRA is an excellent Tax saving option for
                  you. The tax benefit you will be able to avail would depend on your Basic Salary,
                  the HRA that has been provided by your employer , the rent you pay , and your
                  place of residing.

               

-Section 80G – charity & Relief Funds.

                * Tax exemption of up to 50% of the amount paid via cash, draft, or cheque (up to
                 Rs.10,000), towards a charitable organization or relief fund can be claimed.
                 Contribution towards specified organizations makes you eligible for 100% tax
                 exemption.

                * w.e.f FY 2017-18, a donation in cash , in excess of Rs.2,000 shall not be allowed
                    as a deduction. A donation made above Rs.2,000 will have to be made in any
                    mode other than cash, to avail tax benefit.

-Standard Deduction of Rs.40,000.

                 * A standard deduction of Rs.40,000 has been introduced for employees. You will

                   have to forego the transport allowance with deduction Rs.19,200, and medical
                     reimbursement with deduction  Rs.15,000.

                * This standard deduction will provide a benefit of Rs.5,800 (Rs.40,000 (less) 

                   Rs.34,200)