You earn your salary every month and when it's time to file your ITR you are confused what includes and excludes salary? Here is our article on calculation of income from salary.
New Income Tax Regime Budget 2023 Onwards
Slab Rate | Tax Rate |
Upto ₹ 3,00,000 | Nil |
₹ 3,00,000 - ₹ 6,00,000 | 5% on income which exceeds ₹.3,00,000 |
₹ 6,00,000 - ₹ 9,00,000 | ₹ 15,000 + 10% on income more than ₹.6,00,000 |
₹ 9,00,000 - ₹ 12,00,000 | ₹.45,000 + 15% on income more than ₹.9,00,000 |
₹ 12,00,000 - ₹ 15,00,000 | ₹.90,000 + 20% on income more than ₹.12,00,000 |
Above ₹ 15,00,000 | ₹.1,50,000 + 30% on income more than ₹.15,00,000 |
As the filing season begins, salaried classes are in a frenzy about taxes they must shell out for the said financial year. It is important to understand your tax slab and what each of your salary breakup components means. This can help you figure out how to save on taxes. If you want to understand your salary components or want to learn how you can save tax on your salary income, this guide is for you.
SECTION I – Understanding Your Payslip
Basic Salary
This is a fixed component in your paycheck and forms the basis of other portions of your salary, hence the name. For instance, HRA is defined as a percentage (as per the company’s discretion) of this basic salary. Your PF is deducted at 12% of your basic salary. It is usually a large portion of your total salary.
House Rent Allowance (HRA)
Salaried individuals, who live in a rented house/apartment, can claim house rent allowance or HRA to lower tax outgo. This can be partially or completely exempt from taxes. The income tax laws have prescribed a method for computing the HRA that can be claimed as an exemption.
Read more about how to claim HRA exemption.
Also, do note that if you receive HRA and don’t live on rent your HRA shall be fully taxable.
Case Study: Malavika works at an MNC in Bangalore. Her company provides her with a house rent allowance (HRA). But she doesn’t live in rented accommodation as she lives with her parents.
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