Partially Taxable Salary

Many salary components are fully taxable and some are partially taxable. Partially taxable components gets that name due to the demands it needs to satisfy on the taxation aspect. Let us have a detailed look at the partially taxable salary components so that Income Tax filing becomes an easy process.

House Rent Allowance (HRA)

House Rent Allowance which is commonly referred to as HRA is one of the main partially taxable salary components. One can claim tax deduction for the complete HRA they receive in actual. Where HRA is not specifically offered by organizations, tax deduction can be claimed on the total of 40% of the Basic salary plus Dearness Allowance put together. In the case of metro cities, tax deduction can be claimed on the total of 50% of the Basic salary plus Dearness Allowance put together. Another condition satisfying which one can claim deduction towards HRA is by reducing the 10% from the total of Basic and Dearness Allowance put together from actual rent paid for the year.

Some of the key points to note with respect to HRA are listed below for clarity.

  • You will have to produce the PAN Card details of the landlord if the annual rent you pay exceeds 1 Lakh of rupees
  • If in case your landlord does not have a PAN number, you can submit a declaration signed by them for claiming deduction towards HRA
  • In cases where an Income Tax Assessee has a Home Loan also, he is eligible to claim deduction towards Home Loan and House Rent Allowance together

Car maintenance Allowance / Company Car provision

Many companies offer Car to its Employees who are in specific cadres as per their internal structure. The car provided can either be owned by the Company or by the Employee themselves. Irrespective of whether the car is owned by the Employee or the Company, the following conditions are applicable for claiming deduction under this head.

  • A maximum of Rs. 1,800/- per month subject to the condition that the car is equal to or less than 1600 CC
  • A maximum of Rs. 2,400/- per month subject to the condition that the car is equal to or more than 1600 CC
  • Rs. 900/- towards driver fee

Meal Pass / Coupons

Deduction can also be claimed by Income Tax Assessees in Meal Pass or coupons issued by Employers.

  • At the rate Rs. 50/- per meal and two meals per day, a maximum of Rs. 2,200/- per month is exempted from tax per person
  • The above calculation implies that the maximum amount that can be claimed as deduction under this category is Rs. 26,400/- per year

Internet and Mobile Bill reimbursement

All reimbursements made towards Internet and Mobile Phone usage is tax free. The maximum limits can be set by individual companies and is more dependent on the roles played by individual Assessee in the organization.

Leave Travel Allowance (LTA)

Certain conditions need to be followed for the purpose of claiming deduction in the Leave Travel Allowance aspect. Such conditions are listed below for clear understanding.

  • Leave Travel Allowance can be claimed once in 2 years
  • In a block of 4 years, LTA can be claimed twice
  • For the purpose of claiming LTA, family is construed as spouse, children, siblings and parents who are totally dependents on the Income Tax Assessee
  • LTA limits differ from one Company and another so claims against the same vary in actual

All expenses incurred towards Travel ticket booking are covered under LTA claim. Boarding, Lodging and Food expenses are excluded from the LTA Claim

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