The Revenue Tax Act permits numerous Revenue Tax Exemptions for Salaried Workers that are very efficient in saving taxes. A salaried worker can be required to intimate his employer that he’s claiming these revenue tax exemptions accessible for Salaried Workers after which the Employer would compute the Tax on the stability revenue as per the Revenue Tax Slabs and deduct TDS on Wage accordingly.
- Present Revenue Tax Slab Charges in India
- Computation of TDS on Wage with examples
The TDS deducted from Wage Revenue is mirrored within the Kind 16 which is required to be given by the employer to all his workers for deduction of TDS throughout the monetary yr. The TDS so deducted can also be mirrored within the Kind 26AS which will be downloaded on-line by the workers themselves.
Revenue Tax Exemptions for Salaried Workers
The varied Revenue Tax Exemptions for Salaried Workers have been talked about under. These Revenue Tax Exemptions for Salaried Workers are extremely advisable to everybody as they assist in saving tax legally thereby decreasing the tax burden on the Salaried Worker.
For an in depth view on every Revenue Tax Exemption for Salaried Workers, kindly refer the hyperlink connected within the following factors.
1. HRA Exemption for Salaried Workers
Many employers give Home Lease Allowance (HRA) to their workers for them to reside at an excellent place. A portion of the Home Lease Allowance given by an employer to an worker is exempted from the levy of the Revenue Tax and Revenue Tax is just levied on the remaining half.
HRA Exemption is without doubt one of the most helpful revenue tax exemptions for Salaried Workers as it may be simply claimed and the quantity of exemption allowed can also be massive.
- Advisable Learn: Exemption and Taxability of Home Lease Allowance
2. Revenue Tax Exemption on Depart Journey Allowance
Many employers additionally give allowances to their workers to go on a trip with their respective households. The quantity given by the employer to an worker to go on a trip is exempted from the levy of tax to a sure extent supplied that the quantity given was for a trip in India solely.
Depart Journey Allowance can also be an efficient revenue tax exemption for Salaried Workers. Nonetheless, this quantity can solely be claimed if the worker truly goes on a trip as payments for a similar can be required to be furnished.
- Advisable Learn: Tax Exemption on Depart Journey Allowance (LTA/LTC)
3. Exemption on Encashment of Leaves for Salaried Workers
Most employers give all their workers a sure no. of days which will be claimed as leaves. Nonetheless, in case an individual doesn’t declare these leaves, many employers additionally give their workers the choice for en-cashing these leaves i.e. the employers pays additional to the workers for the leaves which have been allowed to be taken however weren’t taken.
This quantity acquired as Depart Encashment can also be allowed to be claimed as an exemption as much as a sure extent.
- Advisable Learn: Revenue Tax Exemption on Depart Encashment
4. Tax Exemption from Pension Revenue for Salaried Workers
On retirement of an worker, many employers pay a pension to their workers. Generally, the employer pays pension from his personal pocket and in some instances, the employer purchases an annuity after which the pension is being paid by the organisation from whom the annuity has been bought.
The Pension will be of two varieties i.e. Commuted and Uncommuted. In commuted pension, the entire quantity of pension is acquired in lump-sum whereas in Uncommuted Pension, the quantity is paid in instalments at common intervals.
No matter the kind of Pension, Revenue Tax Exemption is given in each varieties of pensions as much as a sure restrict.
- Advisable Learn: Revenue Tax Exemption on Pension Revenue
5. Revenue Tax Exemption on Gratuity for Salaried Workers
Gratuity is a present made by the employer to his worker in appreciation of the previous providers rendered by the worker. Gratuity can both be acquired by:-
- The worker himself on the time of his retirement
- The authorized inheritor on the time of the dying of the worker
For the aim of computing Revenue Tax Exemptions for Salaried Workers who’ve acquired gratuity, the workers will be segregated into 3 components after which the exemption is allowed relying on the class they’re into:-
- Govt. Workers and workers of Native Authorities
- Workers coated below the Cost of Gratuity Act, 1972
- Workers not coated in any of the two above.
For revenue tax exemption on the quantity acquired as Gratuity, kindly refer this hyperlink.
6. Revenue Tax Exemption on VRS Acquired
Many workers go for Voluntary Retirement earlier than the precise age of retirement (i.e. 60 years). In such instances, the employer generally offers some cash to the worker on his voluntary retirement.
The quantity acquired or receivable by the worker on voluntary retirement below the golden handshake scheme is exempted below Part 10(10C)
For computation and tax on quantity acquired as VRS, kindly refer this hyperlink.
7. Revenue Tax Exemption for Perquisites
Some employers additionally give their workers numerous perquisites/services like Automobile, Cellphones, Lease Free lodging.
Such perquisites aren’t totally tax free. A particular worth of such services is allowed as an exemption and worth of the stability services allowed is allowed as an exemption.
- Advisable Learn: How perquisites are taxed
8. Exemption of Numerous Allowances
Numerous different allowances like Transport Allowance, Kids Training Allowance are additionally allowed as Revenue Tax Exemptions to Salaried Workers however solely as much as a sure restrict.
- Advisable Learn: Allowances exempt below Part 10 for Salaried Workers
Related Factors concerning Revenue Tax Exemptions for Salaried Workers
- The above said 8 Revenue Tax Exemptions for Salaried Workers are essentially the most helpful exemptions. Nonetheless, there are numerous different exemptions as effectively however aren’t generally used.
- The above said revenue tax exemptions are solely accessible to Salaried Workers. Nonetheless, there are numerous different methods of saving taxes as effectively which can be found to all classes of taxpayers like Advantage of Curiosity on House Mortgage, Revenue Tax Deductions from Sec 80C to 80U, Capital Positive aspects Exemption below Part 54 and so forth.