Many people find the current taxation system to be difficult to understand. Individual taxation rates are determined by an individual’s income and residency status. The Government of India, through amendments to the Finance Act over the years. It has provided taxpayers who file tax online India with more than 70 exemptions and deductions options through which individuals can bring their taxation liability. Keep reading this blog post to learn more.
Mr. Arun Jaitley, the then Finance Minister, introduced Standard Deduction in the Assessment Year 2019-2020 budget. This deduction replaced the transport allowance of ₹19,200 and medical reimbursement of ₹15,000 per annum. It is deducted from the gross salary and the current amount of standard deduction has been increased from ₹40,000/- to ₹50,000/-
The following are the major exemptions available to Indian taxpayers: – Typical Deduction
-Rental Allowance
House Rent Allowance is an exemption under Section 10(13A) of the Income Tax Act, 1961. HRA is only available to salaried individuals who live in rented housing. HRA has the lowest value of the following:
- a) The amount of HRA specified by the company in the salary structure
- b) 10% of basic salary deducted from actual rent paid c) 50% of basic salary in case of a metro city
- d) 40% of the basic salary in the case of a non-metro city
– Travel Allowance on Leave
Leave Travel Allowance is a stipend paid by the employer to an employee who is on leave. In addition. this exemption is only available for travel within India. This exemption is available for the travel of the employee alone or with his family. The employee’s family includes his or her spouse, children, and wholly or primarily dependent parents, brothers, and sisters. Furthermore, such an exemption is not available for more than two children born after October 1, 1998.
– Reimbursement for mobile phones and Internet access
The expenses incurred by a salaried individual on mobile and internet during the course of employment are fully exempted from tax.
– Food vouchers or coupons
The value of free food and non-alcoholic beverages or meal vouchers provided by the employer is exempt from income tax. Moreover, to the extent of $50 per meal, according to the Income Tax Rules.
– Company Leased Car
The car provided by the employer to its employees is tax-free. The EMI on a car lease paid by the employer is deducted from the employee’s salary, reducing the taxable amount. Furthermore, reimbursement for car-related expenses (such as driver’s salary, fuel, repairs, and maintenance) is considered non-taxable.
Final Thoughts
Taxpayers in India can take advantage of the following major TDS return filing: – Public Provident Fund. Furthermore, PPF, or Public Provident Fund, is a long-term tax-saving instrument. In addition to this, The interest and return amount on a PPF are tax-free. PPF deduction is covered by Section 80C of the Income Tax Act of 1961, and the maximum deposit under this section is Rs. 1,50,000/-.
