Income from Salary PowerPoint Presentation, PPT - DocSlides

Income from Salary PowerPoint Presentation, PPT - DocSlides

2016-09-18 244K 244 0 0

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Basic Conditions. Master And servant or employer and employee relationship. Contract of employment is important. BASIS OF CHARGE. Either accrual or receipt (which ever is earlier). Salary due from an existing and/or former employer. ID: 467833

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Presentations text content in Income from Salary

Slide1

Income from Salary

Basic Conditions

Master And servant or employer and employee relationship

Contract of employment is important

Slide2

BASIS OF CHARGE

Either accrual or receipt (which ever is earlier)

Salary due from an existing and/or former employer

Salary paid or allowed by the employer though not due

Arrears of salary paid or allowed

Slide3

SALARY COMPONENTS

Basic salary

Advance salary

Arrears of salary

Bonus

Allowances

Leave encashment on retirement

Slide4

COMPONENTS

Retrenchment compensation

Pension

Gratuity

Voluntary retirement payments

Perquisites

Provident fund payments

Slide5

CONCEPT

Gross salary

Deductions such as G.P.F., P.T.

Net salary

Slide6

COMPUTATION

Gross salary

Less:- exemption us. 10

Less:-deduction us. 16

Net salary

Deduction under chapter VI-A

Net taxable salary

Slide7

EXEMPTION UNDER SECTION 10 FOR SALARY

LEAVE ENCASHMENT 10(10AA)

GRATUITY 10(10)

PENSION 10(10A)

HOUSE RENT PAID 10(13A)

TRANSPORT ALLOWANCE 10(14) –RULE 2BB

LEAVE TRAVEL CONCESSION 10(5)

Slide8

Leave Encashment Sec.10(10AA)

Meaning – Leave Salary

Salary standing / accumulated to the credit of an employee at the time of retirement is Leave Salary

Encashment of the same at the time of retirement is referred to as leave encashment

Tax treatment for the same – next slide

Slide9

Leave encashment – tax treatment

Nature of Leave encashment

Status of the employee

Tax treatment

Leave encashment during continuity of employment

Government/ Non- government

Taxable

Leave encashment at the time of retirement or leaving of job

Government

Fully Exempt

Leave encashment at the time of retirement or leaving of job

Non-government

Fully or partly exempt

Slide10

Non government Employee exemption - detail

1Period of earned leave to the credit of the employee * average monthly salary210 * average monthly salary3Rs.300000 (specified amount by government)4Leave encashment actually received

In case of non-government employee (including an employee of local authority or public sector undertaking – exemption is least of the followings.

Slide11

Gratuity – Section 10 (10)

It is a retirement benefit.

Payable at the time of cessation of employment & on the duration of service.

Government employees i.e. Central Government employees, State government employees, employees of local authority but not of statutory corporations

Tax treatment - next slide

Slide12

Tax treatment

Status of the employeeWhether Gratuity is taxableGovernment employeeFully exempt U/s. 10(10)(i)Non Government employee covered by Payment of Gratuity Act , 1972Fully or partly exempt from tax U/s. 10(10)(ii)Non Government employee not covered by Payment of Gratuity Act , 1972Fully or partly exempt from tax U/s. 10(10)(iii)

Slide13

Employees covered by Payment of Gratuity Act, 1972

Any gratuity received is exempt to the least of the following:

1.15 days salary (7 days in case of seasonal establishment) based on salary last drawn for each year of service.(15 days salary * length of service) (6 months & above = full year) (Salary= last drawn salary =Basic + D.A.) (days in month=26)2.Rs.3500003. Gratuity actually received

Slide14

Employees not covered by Payment of Gratuity Act, 1972

In case of other employee gratuity received is exempt to the least of the following:

1.Rs.3500002.Half month’s Salary for each completed year of service ( only complete year, part of the year to be ignored; salary based on average salary for last 10 months immediately preceding; Salary=Basic + D.A.)3.Gratuity actually received

Slide15

Pension

Pension received from UNO by an employee or his family members is not chargeable to tax.

Family pension received by the family members of armed forces is exempt under section 10(19).

Family pension received by others (not covered in 2 above) after the death of the employee is taxable in their hands under section 56 – income from other sources.

Slide16

Contd.

Un-commuted Pension – It is periodical payment of pension- i.e. monthly pensionCommuted Pension – It is the lump sum payment in lieu of periodical payment.

Pension

Status of the employee

Is it chargeable to tax?

Un-commuted

Government / non government

It is chargeable to tax

Commuted

Government

It is fully exempt from tax under 10(10A)(i)

Commuted

Non government

It is fully or partly exempt from tax under 10(10A)(ii)

Slide17

Commuted pension & non government employee

Non government employeeGratuity is received1/3rd of the pension received is exemptNon government employeeGratuity is not received½ of the pension received is exempt.

Slide18

HRA Section 10(13A) & Rule 2A

Least of the following is exempt Salary = Basic + D.A.( if terms of employment so provide)

1An amount equal to 50% of Salary (For Metro cities) and 40% of Salary ( For non- Metro cities)2The HRA received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year3The excess of rent paid over 10% of Salary

Slide19

Transport Allowance –10(14) Rule 2BB

Allowance is granted to an employee to meet his expenditure for the purposes of commuting between the place of his residence and the place of his duty

It is exempt up to Rs.800 per month

In case of blind or orthopaedically handicapped it is Rs.1600 per month.

Slide20

Leave Travel Concession 10(5)

Leave Travel assistance extended by an employer for going anywhere in India along with his family is exempt on the basis of the provisions given in table.

Family includes spouse, children, parents , brothers and sisters (who are dependent on the employee)

Only two journeys in a Block of Four years is exempt.

Amount of exemption is limited to the actual expenditure

Slide21

Contd.

Where journey is performed by air

Amount of economy class air fare of the national carrier by the shortest route or the amount spent whichever is less

Where journey is performed by rail

Amount of air conditioned first class rail fare by the shortest route or amount spent whichever is less

Where the places of origin & destination of journey are connected by rail and the journey is performed by any other mode of transport

Amount of air conditioned first class rail fare by the shortest route or amount spent whichever is less

Where the places are not connected by rail & recognized public transport system exist

First class or deluxe class fare by the shortest route or amount spent which ever is less

Slide22

Perquisites - Taxable

Any residential accommodation given to the employee without charging any rent or at a concessional rate

Free supply of gas , electricity or water for household consumption

Wages paid by the employer for the domestic servants employed by the employee

Value of free boarding & lodging expenses.

Free educational facilities to the children

Slide23

Contd.

Subscription & Bills paid to the club houses by the employer

Vacation at the holiday homes or holiday trips at the cost of the employer

Income tax due on salary but paid by employer

Use of motor car with or without a driver at the cost of the employer for personal use.

Slide24

DEDUCTIONS FROM SALARY

ENTERTAINMENT ALLOWANCE [16(2)]

If granted by the employer it is included in the Salary income

From A.Y. 2002-03 the allowance deduction is allowed only to Government employees.

The least of the following is exempt

Actual amount received

Rs.5000 per year

1/5

th

of the basic salary

Slide25

DEDUCTIONS FROM SALARY

PROFESSIONAL TAX [16(3)]

Tax deducted from the Salary under Maharashtra State Tax on professions, trade, callings and Employment Act 1975.


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