My Almost 90% Clients Are Salaried Employees. As the end of the financial year approaches, they are worried about Income tax. There are many Provisions in Income Tax for Allowance and Deductions. many of them are Specially for Salaried Employees, But many peoples are unaware about it and they end up with paying extra tax. After I publish My article Income Tax Slab For Financial Year 2022-23, Some clients request me to write detailed post Income Tax Deductions and Allowance Allowed to Salaried Employees For Financial Year 2022-23. When they told me to write I feel Motivated that peoples having benefits of My hard work. We will See Deductions and allowances which is available for salaried individual (some are for business person also).I will keep updating this page if any changes so, please bookmark this for your future reference.
Allowance Allowed for Salaried Employees
Standard deduction
Rs. 50,000 Per Financial Year Standard Deduction Allowed to every Salaried Employee. Any income slab Employee can have this allowance. Before it was Rs. 40,000 in budget 2018 in place of Transport Allowance Rs. 19,200 and medical allowance Rs. 15,000, our Finance Minister increase Standard Deduction Limit to Rs. 50,000.
House Rent Allowance (HRA)
House Rent allowance allowance also allowed to any income slab employee. Least of following is exempted
- Actual HRA Received.
- 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi, Madras).
- Rent Paid minus 10% of salary.
Children Education Allowance
If your Employer Give you Child education allowance. Rs. 100 / Month per Child for Maximum 2 Child is exempted from income tax. so total rs. 2400 maximum is exempted. Now you will have question in your mind, what if I have one Child so, rs. 2400 will exempted? No. Maximum 100 / month per Child mean Maximum 1200 / Child.
Hospital Expenditure Allowance
If you Received Hospital Expenditure Allowance from your employer, Rs. 300 / Child Per Month is exempted for Maximum for 2 Childs.
Conveyance Allowance
Up to Rs. 19,200 / year (Rs. 1600 / month) is Exempted as a Conveyance allowance. Individuals who are blind or orthopedic-ally handicapped can have Rs. 3200 / Month.
Any Allowance to meet cost of tour or Transfer
Any amount spend for tour to perform duties or transfer including packaging is completely exempted from tax.
Uniform Allowance
Up to 20,000 / year Uniform allowance Exempted.
Deduction Allowed
Section 80C
Up to 1,50,000 can claim deduction in Income tax section 80C in single financial year. Below Component are Come under 80C
- Life Insurance Premium (excluding tax)
- Purchase of N.S.C. (postal scheme National Saving Certificate)
- Invested in Provident Fund / Public Provident Fund
- Repayment of Principal Amount in Housing Loan
- Unit Linked Insurance Premium (ULIP)
- Invested in ELSS (Equity Linked Mutual Fund) Scheme
- Children Education Expenses maximum for 2 Childs
- Property Registration Charges
- Sukanya Samridhi Yojana
- Tax saving Fixed Deposit for 5 Years
Section 80CCC
This Section provide deduction up to Rs. 1,50,000 for pay premium of certain pension funds or buy new policy of same. this limit also include with section 80C
Section 80D
Self Family Health Insurance – Up to Rs.25000 can claim deduction for health insurance premium for family (excluding parents). if anyone in your family is senior citizen this limit increase to Rs.50000
Parent’s Health Insurance -Additionally for Parent’s Health Insurance premium separate limit up to Rs. 25000. if parents are senior citizen this limit increase to Rs. 50000
Above all premium consider without GST and should pay other then cash mode.
Preventive Health Check-Up : – Expenses for Health Check-Up also come under Section 80D upto 5000 included in above limit.
Section 80DD
Deduction Towards Payment made for Treatment of Physical Handicapped Dependent. Flat Deduction of Rs.75000 available for a person with disability, irrespective of expense incurred.Deduction is Rs. 1,25,000 if person have severe disability (80% or more).
Section 80DDB
Deduction towards specific disease treatment of Self or Dependent. Diseases Are Neurological diseases, malignant Cancer, AIDS, Chronic Renal failure and Thalassaemia. Limit of Deductions are depend upon age of patient if age is Less then 60 years, Amount Of deduction is Up to Rs. 40,000. If Age More then 60 years, Amount of Deduction is up to Rs. 1,00,000.
Section 80E
Interest Payment towards Higher Education Loan for Self or Relative. Maximum up to 8 years can get tax benefit. There is No maximum limit.
Section 80G
Donation paid towards any Funds, Institute or Charitable trust. All Donation not equally treated by Income tax. Some donations to funds/ Charitable Trust eligible 50% deductions and some 100%.
Section 24
Home Loan Interest Deduction up to Rs. 2,00,000 can avail in this section.
Section 80EEA
Interest paid on Home Loan for affordable Housing can get deduction up to Rs. 1,50,000. please note this limit is on and above Section 24 limit.
Section 80EEB
Interest Paid on Purchase of Electric Vehicle can get Deduction up to Rs. 1,50,000.
If you any any Doubt or need help while filing Income Tax Return you can contact me here.