Showing posts from March, 2014

Must components in your Salary to minimize Income Tax

What does, however, ‘salary’ includes? Salary includes basic salary, bonus, wages, pension, fees, commission, gratuity, and encashment of leave salary, advances and arrears, profits in lieu of salary, allowances and perquisites.   Salary income is taxable in the hands of an individual in the year of receipt or earning of salary income, whichever is earlier. Here are some of the safe components of your salary structure which can minimse your tax burden and help you plan your Salary Structure – • If you live in a rented an accommodation and are entitled to a house rent allowance (HRA), the same is exempt to the extent of least of the following; 50 per cent of the basic salary, excess of rent paid over 10% of basic salary, actual HRA received. However, you cannot take benefit of HRA, if you live in a rent-free accommodation or live with your family or in your own house.   House Rent Allowance (HRA) taxability, working / calculation   • Provident Fund: Under Section 80C, providen