New Delhi: A salaried individual has to look at various payables, receivables, investments while calculating the income tax liability to file income tax returns for a particular financial year or an assessment year. Companies pay a couple of allowances based on the respective salary structure. All the allowances paid by the companies to the employees are bundled together under the salary structure. Several allowances such as travelling allowance, conveyance allowance, research allowance, travelling allowance are tax-free, according to the prescribed guidelines.
According to an ET report, certain allowances are taxable including Dearness Allowance (DA), cash allowance, City Compensation Allowance (CCA), Entertainment Allowance and Project Allowance. All these five allowances are given to the employees to meet certain requirements such as adjustments of inflationary effect on living cost to PSU employees, escalated living expenses in metro cities, the newspaper report added.
In the interim Budget 2019-20, the acting Finance Minister Piyush Goyal hadn’t proposed any changes in the income tax slabs, however, he proposed a bundle of reliefs for salaried and middle-class people such as increasing the TDS threshold limit on fixed deposit to Rs 40,000 from the existing Rs 10,000, full tax rebate on taxable annual income up to Rs 5 lakhs.
Further, individuals will also be eligible to claim income tax deductions from of up to Rs 2 lakh on interest home loans, education loans, National Pension Scheme (NPS) contributions, medical insurance, medical expenditure on senior citizens. FM Goyal has also proposed to increase the standard deduction by Rs 10,000 to Rs 50,000 from the present Rs 40,000. Therefore, going forward, all the salaried persons can claim a standard deduction of Rs 50,000 on their respective taxable income.