The following topic is explained in respect of ‘structure your salary’ for the students who are preparing for CS Professional. Let’s start –
How to structure your Salary to get maximum benefits?
Salary is such a small word whereas if we zoom in into this it consists of many parts like Basic Pay, Allowances, Perquisites, etc.
Note: This article is not to explain the concept of Salary in detail but to understand that how the tax liability can be reduced of a salaried person.
An eye for the points whose benefit can be taken to reduce the tax liability.
- ALLOWANCES: is a fixed monetary amount paid by the employer to the employee for meeting some particular expenses, whether personal or for the performance of duties These are generally taxable unless a particular exemption has been provided.
Types of Allowances:
- Hous Rent Allowance (HRA):
MINIMUM value out of the following three
- Actual HRA received
- Rent paid – 10% of Basic Pay
- 40%/50% of the Basic Pay (50% if the residential house is situated at Kolkata, Mumbai, Delhi or Chennai and 40% if the house is at any other place)
- Transport Allowance
Rs. 1,600 p.m. (Rs. 3,200 if the employee is blind or handicapped) or Actual expense incurred whichever is LESS.
- Children Education Allowance
Rs. 100 per month per child (up to 2 children).
- Children Hostel expenditure Allowance
Rs. 300 per month per child (up to 2 children).
- Medical Reimbursement: Benefit up to Rs. 15,000 can be availed on the expenditure of medical expenses (bills of which are to be submitted to the employer) other than Mediclaim.
III. And last but not the least, Deductions under section 80C to 80U (These deductions will be explained in another article) can be taken.
Rebate u/s 87A
For Salaried persons whose earning is up to Rs. 5,00,000 can avail the rebate up to Rs. 2,500.
The proper explanation of the computation of salary is available for CS PREPARATION in Online classes for CS Professional.
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