ITR Tips: You will not need a CA to file ITR, find out in this way how much income tax you will have to pay..

The window for filing Income Tax returns for salaried people is open till 31st July. ITR has to be filed for FY 2023-24 (AY 2024-25). But, you are not able to understand how much tax you have paid or what are the chances of getting a refund. In such a situation, the salaried class gets confused about tax calculation.

Apart from the basic salary, there are many other components, some of which are fully taxable, some get tax exemption, while some are outside the tax purview. If you are also confused, then look at your salary slip and find out which part of the salary is taxable and which is not. You will understand the whole calculation. After this, you may not even need a CA.

Mathematics of tax on salary-
Under the IT Act, of 1961, payroll processing taxable benefits can be divided into two parts - recurring and ad hoc. These include allowance and perquisites. These include the expenses and facilities given to the employees. Some of these are taxable, some are less taxable or not taxable at all. Let us know.

1) Which part of the salary is taxable-

1. Basic salary-
Basic salary is the base or first level of your salary, in which there is no deduction of any kind. There is no bonus or benefit added to it, it is completely your wages. It is taxable, and it can never exceed 40% of your CTC (cost to the company).

2. Medical expenses-
Medical allowance given by the company is completely taxable.

3. Conveyance allowance-
The company gives you a conveyance or transport allowance for commute expenses. Allowance above Rs 1600 per month and Rs 3200 in the case of disabled people is taxable.

4. Dearness Allowance-
Dearness Allowance is given by the company to help its employees maintain their expenses amid inflation. This allowance is taxable and the employee has to disclose it while filing an ITR.

5. Some other allowances-
There are many other allowances like City Compensatory Allowance, City Compensatory Allowance, Overtime Allowance, and Meal Allowance, on which you have to pay full tax.

2) On which part of the salary some tax is levied-

There are some parts of the salary on which you have to pay partial tax.

1. House Rent Allowance (HRA)-
If you live in a rented house, then you get tax exemption on HRA. But if you live in your own house, then the allowance given by the company becomes completely taxable.

2. Leave Travel Allowance (LTA)-
The company gives allowance for travel during the employee's holidays, on which you can claim tax exemption. You can get an exemption on travel expenses, the cost of staying in the hotel, food, and drinks is not covered in it. LTA exemption can be taken only on domestic travel. Also, you can take an exemption on LTA only twice in 4 years.

3. Children's education and hostel allowance-
The company gives children education allowance for the education of the employee's children. An exemption of Rs 1200 is given annually. This can be taken for a maximum of two children, that is, you can take an exemption of Rs 2400 annually. Apart from this, allowance is also given for children's hostel expenses. Rs 300 per month can be claimed for one child and Rs 7,200 annually for two children. The allowance above this is taxable.

3) Which part of the salary is completely tax-free?
1. Medical insurance premium-
There is no tax on medical insurance provided by the company to the employee and his family.

2. Phone and internet bills-
You will be given an allowance for phone and internet bills by the company. This is completely tax-free. You have to show the bills for this.

3. On food, reading and gadgets-
If you get meal coupons from the company, subscriptions to books, newspapers, journals, etc., then all this is tax-exempt. Laptops, tablets, computers, etc. provided by the company are also tax-free facilities.

How to calculate tax?

1. First of all open any online Income Tax Calculator. Select the FY in which you want to calculate the tax.

2. Select your age according to your requirements.

3. Click on 'Go to next step'.

4. Enter your taxable salary i.e. salary excluding exemptions like HRA, and LTA (this will allow you to check tax liability in the Old Tax Regime)

Or enter only your salary without availing exemptions like HRA, LTA, or professional tax. (If you want to know your tax liability under the new tax slab)

5. Along with taxable salary, you have to enter other details like interest income, rental income, interest paid on home loan for rent, and interest paid on loan for self-occupied property.

6. For income from digital assets, enter net income (sales consideration less cost of acquisition), such income is taxed at 30% plus surcharge and cess.

7. Click on 'Go to Next Step' again.

8. If you want to calculate your tax under the old tax slab, you need to enter your tax saving investments under sections 80C, 80D, 80G, 80E and 80TTA.

9. Click on 'Calculate' to know your tax liability. You will get your tax calculator.

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