Union budget 2013: The ideal tax structure for a salaried employee. Of course it’s just a wish!

Kripananda Chidambaram, 20 Feb 2013

Tax planning always has been confusing. We at fintotal.com thought about how life can be made simpler for the humble salaried employee.

Remove all tax exemption on allowances. Keep it simple. There needs to be just 2-3 heads under salary income

Basic Salary

Rs ****

Add: Allowances/Incentives/Bonus

Rs ****

Total Salary Income

Rs ****

And this is how the computation of tax under salary income should look like

Employee who stays in rented apartment

Total salary income

Rs *****

Less:

Rent relief Section 80R (Actual rent paid or 20% of annual salary)

Rs ****

Conveyance Relief Section 80C

Rs 24000

Regular Medical expense relief Section 80M

Rs 15000

Managing risk Section 80I

 

--Mediclaim for self, spouse and children

up to Rs 15,000

--Mediclaim for parents

up to Rs 20,000

--Term insurance

up to Rs 40,000

Providing for future Section 80F (upper limit 10% of annual  income)

Rs ****

--Any mutual fund (lock in 5 yrs)

 

--PPF

 

--ULIPs

 

--NPS

 

Encouraging education Section 80E

 

--Actual tuition fees or 10% of salary income whichever is less

Rs ****

--Actual EMI on education loan with an upper limit of Rs 3 lacs per annum

Rs ****

Donations to charity Section 80D(Max Rs 1 lac)

Rs ****

Total taxable income

Rs *****

Employee who has an home loan EMI

Total salary income

Rs *****

Less:

Home EMI relief Section 80H (30% of EMI paid or 50% of total salary whichever is lower)

Rs ****

Conveyance Relief Section 80C

Rs 24000

Regular Medical expense relief Section 80M

Rs 15000

Managing risk Section 80I

 

--Mediclaim for self, spouse and children

up to Rs 15,000

--Mediclaim for parents

up to Rs 20,000

--Term insurance

up to Rs 40,000

Providing for future Section 80F (upper limit 10% of annual  income)

Rs ****

Any mutual fund (lock in 5 yrs)

 

--PPF

 

--ULIPs

 

--NPS

 

Encouraging education Section 80E

 

--Actual tuition fees or 10% of salary income whichever is less

Rs ****

--Actual EMI on education loan with an upper limit of Rs 3 lacs per annum

Rs ****

Donations to charity Section 80D(Max Rs 1 lac)

Rs ****

Total taxable income

Rs *****

Tax slab

Upto Rs 3 lacs   

nil          

Rs 3 lacs to Rs 6 lacs

10%

Rs 6 lacs to Rs 12 lacs

20%

Rs 12 lacs and above

30%


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