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  • Tax exepmtions and allowances for salaried people in India?

    Here you can find informations on tax saving methods including exemptions, allowances for salaried people

    Salaried class in India is ignorant about tax saving schemes in India. List the allowances which are provided to salaried people in India to save taxes. Also explain the conditions under which particular allowance can be availed? Also list the amount of money that can be relaxed under each allowance.
  • Answers

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  • There are a few Tax exemptions allowed for Salaried employees. I am listing out the most important of such exemptions that can be claimed by the salaried class.

    HRA Exemption

    Many employees are given House Rent Allowance(HRA). A part of this amount is exempted from income tax as Tax is levied on some part itself. It can be easily claimed. The amount of exemption is also quite high.

    Exemption on Leave Travel Allowance

    Many employers give allowances to their employees to go on vacation with their families. This amount is exempted to a certain limit. It has a condition that the allowance is given for vacation only in India. Amount can only be claimed if the employee actually goes on vacation as you would need to submit the bills.

    Exemption on Leave Encashment

    In case you don't avail the leave provided to you, certain employees give you an option to encashing them. Such amount is also entitled to tax exemption to some extent.

    Exemption from Pension Income

    There are two types of pensions - commuted and uncommuted. Commuted pension is given in lump sum whereas uncommuted pension is given installments in regular intervals. In either type of pension, the tax exemption is allowed to certain extent.

    Exemption For Gratuity

    Gratuity is the gift provided by the employer for the past years of service. This gratuity can either be received by the employee at the time of retirement, or by the legal heir in case of death of the employee.

    Exemption on VRS

    Some employees opt for voluntary retirement before the actual retirement age. Such employees receive some money from the employee depending on their service left. This amount is exempted under section 10(10C).

    Exemption on perks

    Some high end employees receive perks/facilities like vehicle or mobile phones. This amount is not entirely tax free, but a specific value of this amount is exempted from payment of tax.

    Exemption on various allowances

    Some employees get allowances like children's education, transport allowance etc. A portion of such amount can be claimed for exemption.

    To get the exact amount that can be claimed under the above income, you need to consult a tax consultant who can guide you to work out a better exemption based on your income categories.

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