It's no mystery that a rupee saved is a rupee earned, right? And where would you like that rupee to go - in the coffers of the government or the comfort of your wallet? Not a hard choice to make, is it?

1. Income Chargeable Under The Head Salary
CA Himanshu Jagetiya

2. Before We Go Ahead
Do you planned your taxes ?
CA Himanshu Jagetiya

3. Frequently Asked Questions
• While filing ITR 1 an error is appeared, since the amount disclosed in income chargeable under the head
salaries is less than 90% of salary reported in TDS1, please ensure to fill details in others in exempt income.
• My Employers did not show claimed LTA & Medical expenses in form no. 16 & calculated tax on total amount. How
should I claim/refund that amount from IT Dept. In ITR form there is no provision column to claim that amount.
• Will the pension received from EPFO is taxable under the head salary?
• I have received an advance salary of Rs.5 lac with a condition that I will work for the Company for at least 3 years but if I
leave before that period I need to payback Rs.5 lac. Will this advance salary is taxable.? If yes, then in which year?
• ​During the year I had worked with three different employers and none of them deducted any tax from salary paid to me. If
all these amounts are clubbed together, my income will exceed the basic exemption limit. Do I have to pay taxes on my
own?
• ​Are receipts from life insurance policies on maturity along with bonus taxable?
• What is standard deduction?
• I have forgot to claim HRA in my company, can I claim the same while filing income tax return?
• How can I use LTA to save my tax?
• Question on 31 March 2019 - Where should I invest to save my tax.
CA Himanshu Jagetiya

4. Generally whatever is received by an employee from an employer in cash, kind or as a facility [perquisite]
is considered as salary.
The term Salary under income tax include :
► Wages
► Pension
► Gratuity
► Leave Encashment
► Fees
► Commission
► Perquisites
► Profits in lieu of or in addition to Salary or Wages
► Advance of Salary
► Annuity
► Annual accretion to the balance of Recognized Provident Fund
► Transferred balance in Recognized Provident Fund
► Contribution by Central Government or any other employer to Employees Pension Account as referred in
Sec. 80CCD
What is included in Salary
CA Himanshu Jagetiya

5. Points to consider
• Salary income is chargeable on due or receipt basis, whichever is earlier.
• Existence of employer and employee relation is must between payer and payee to term the amount received as
salary else it would be taxable other head – Income from other source.
Employer Employee
CA Himanshu Jagetiya

6. Is this amount chargeable under Salary
• I am a resident Indian and I got some amount credited into my account as I checked/evaluated few Thesis (of
South Africa university); will that amount form part of my salary and should be accounted as taxable salary.
CA Himanshu Jagetiya

7. Components of Salary
► Basic Salary
► Dearness Allowance
► Bonus, fee or commission
► Perquisites
► Allowances
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8. Taxability of per diem allowances received outside India
• Daily allowance or per diem is an amount which is ONLY meant to cover your daily needs of housing, travel
and food. Since it is an allowance, it is NOT taxable in the country you are travelling to for short term
business assignment.
• Per diem allowance is neither taxable in Indian nor abroad if it is fully spent for the purpose it has been given
to you. But do remember that any unspent amount, if brought back in your home country makes it eligible for
income taxes in your home country.
• As per income tax rules, the amount you brought back in India should be considered as your income and
added to your Indian income for calculating income tax.
TaxableNon Taxable
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9. Types of Allowance
Allowances can be classified into three categories :
► Allowances that are fully taxable
► Allowance which are fully exempt
► Allowances which are exempted for a specific amount
► Allowances which are exempted on the basis of actual expenditure
CA Himanshu Jagetiya

10. Fully Taxable Allowance
If these allowance form part of your salary than these amount are fully taxable :
• Dearness Allowance
• Entertainment Allowance
• Overtime Allowance
• City Compensatory Allowance
• Project Allowance
• Tiffin/Meals Allowance
• Cash Allowance
CA Himanshu Jagetiya

11. Partly Taxable allowances
• House Rent Allowance: It is the allowance that an employer pays to his employee for accommodation.
• Special allowances like allowance for travel, uniform, helper, research allowance etc. are exempt on basis of
actual expenditure.
• Special allowance to meet personal expenses like children’s education allowance, children hostel allowance
etc. for theses type of allowance the exemption amount is specified under the act and any amount received in
excess of the exemption amount will be chargeable to tax.
Allowances received by judges of high court/supreme court/employees of united nations organization are fully
exempt.
CA Himanshu Jagetiya

12. Calculate Your HRA
Least of the following is exempt:
a) Actual HRA Received
b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Chennai)
c) Rent paid minus 10% of salary*
• Salary = Basic + DA (if part of retirement benefit) + Turnover based Commission
Note:
• Fully taxable, if HRA is received by an employee who is living in his own house or if he does not pay any
rent
• It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs.
1,00,000 annually.
CA Himanshu Jagetiya

13. Perquisites
Perquisites
Rent free unfurnished accommodation provided to Central and State Government employees
Unfurnished rent free accommodation provided to other employees
Rent free furnished accommodation
Accommodation provided in a hotel
Motor Car / Other Conveyance
Any sum paid by employer in respect of any obligation of an employee
Services of a domestic servant including sweeper, gardener, watchmen or personal attendant
Supply of gas, electricity or water for household purposes
Medical facilities outside India
Form 12 BA reflects the perquisites provided by an Employee to its employee. The Employee need not to do
any working for valuation of perquisites. Below is the list of perquisites :
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14. Perquisites
Perquisites
Education Facilities
Transport facilities provided by the employer engaged in carriage of passenger or goods
ESOP/ Sweat Equity Shares
Employer’s contribution towards superannuation fund
Interest free loan or Loan at concessional rate of interest
Tax paid by the employer on perquisites given to employee
Transfer of movable assets by an employer to its employee
Credit Card
Leave Travel Concession or Assistance
CA Himanshu Jagetiya

15. Perquisites
Perquisites
Free Recreation/ Club Facilities
Amount payable by the employer to effect an insurance on life of employee or to effect a contract for an annuity
Facility of travelling, touring and accommodation availed of by the employee or any member of his household for any holiday
Use of movable assets of the employer by the employee is a taxable perquisite
Any other benefit or amenity extended by employer to employee
Free food and beverages provided to the employee
Gift or Voucher or Coupon on ceremonial occasions or otherwise provided to the employee
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16. Pension Income
No Type of Income Head of Income Applicability of Deduction
1 Annuity (uncommuted Pension)
received from current employer
Income from Salaries Yes, Standard deduction Rs 40,000 P.A (FY 18-
19) and Rs 50,000 P.A (FY 19-20)
2 Annuity (uncommuted Pension)
received from former employer
Income from Salaries Yes, Standard deduction Rs 40,000 P.A (FY 18-
19) and Rs 50,000 P.A (FY 19-20)
3 Family pension (i.e. pension received
after death of employee)
Income from Other Sources Yes, u/s 57(iia) i.e. 1/3rd of pension amount or
Rs 15,000 P.A whichever is lower
4 Annuity (uncommuted Pension)
received from any person other than
employer (like LIC Annuity)
Income from Other Sources No
Commuted pension (lumpsum) received by non government employees is taxable subject to exemption u/s 10(10A)
of the Income Tax Act, 1961.
CA Himanshu Jagetiya

17. Deduction from salary
• Standard Deduction – Rs 40,000
• Professional Tax - Amount actually paid during the year.
• Deductions under section 80
CA Himanshu Jagetiya

18. Thanks
Himanshu Jagetiya
himanshujagetiy91@gmail.com
+91 90824 49096
CA Himanshu Jagetiya