Must Know : Allowances & Deductions for Salaried Employees

Useful-Income-Tax-Deductions-to-Save-Taxes1-e30a85e7

List of Allowances & Exemptions relevant to Salaried Employees :

S.NoSectionNature of deductionAmount Whether available in the new regime?
1.16Standard Deduction50,000Not Available
2.16Employment Tax (Professional Tax)ActualNot Available
3.80CLife Insurance Premium – Self,Spouse, ChildActual (Subject to a limit of 1,50,000 and other conditions)Not Available
4.80 CContribution Made to PF AccountActual (Subject to a limit of 1,50,000)Not Available
5.80 CTuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children.Actual (Subject to a limit of 1,50,000)Not Available
6.80CHousing Loan – Principal AmountActual (Subject to a limit of 1,50,000)Not Available
7.80 CCD (1)/(1B)Contribution to NPS50,000 (Additional limit on & above limit of 1.5 lakh)Not available
8.80 CCD(2)Employer Contribution to NPS10 % of Salary+DAAvailable
9.80 DAmount paid for health insurance of self, spouse, dependent children or parents
For self, spouse and dependent children : Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen); For parents of the assessee : (Additional) Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen) Medical expenditure if no amount is paid in respect of health insurance– Rs.50,000 (only in case of senior citizen) Aggregate amount of deduction cannot exceed Rs.1,00,000 in any case
Not Available
10.80 EInterest on Education loan – (maximum period : 8 years)ActualNot Available
11.80 EEBInterest payable on loan purpose of purchase of an electric vehicle.Actual (Subject to limit of 1,50,000)Not Available
12.80 GGRentLower of : a)5000 p.m
b)Rent paid – 10% of Total Income c)25% of Total Income
Not Available
13.10(13A)House Rent AllowanceLeast of the following is exempt: a) Actual HRA Received b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras) c) Rent paid minus 10% of salary Note:   i.  Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent  ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October, 2013]Not Available
14.10(14)Conveyance AllowanceActualAvailable
15.10(14)Travelling Allowance – to meet the cost of travel on tour or on transferActualAvailable
16.10(14)Daily Allowance –  to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of dutyActualAvailable
17.10(14)Helper Allowance, Uniform AllowanceActualNot Available
18.10(5)LTATwo journeys in a block of 4 calendar years is exemptNot Available
19.10(10AA)Leave EncashmentLeast of the following shall be exempt from tax: a)Amount actually received b) Unutilized earned leave (Subject to limit of 30days for each year of Service) X Average monthly salary c) 10 months Average Salary d) Rs. 3,00,000 Available
20.10(10)GratuityLeast of following amount is exempt from tax: 1. (15/26)* X Last drawn salary X completed year of service or part thereof in excess of 6 months. 2.Rs. 20,00,000 3.Gratuity actually received. * If not covered under Gratuity Act –  Half month’s Average Salary* X Completed years of serviceAvailable
2124Interest on Housing loanSelf Occupied – Actual (Subject to limit of Rs 2,00,000) Let Out – No Limit* *However Interhead Set off with Salary permissible up-to a limit of 2 lakh.

 

Self-occupied -Not Available

Anil Kumar Tenneti

Editor, Tax Concept & TC VIP. Chartered Accountant II Stock Market Enthusiast. I write articles related to market, taxation, Company law and MSME.

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