Tax on Salaried Employee in India

Income Tax on Salary in India

Income Tax in India is levied on the total income earned by an individual during a financial year (April 1 to March 31). Salary is one of the major sources of income for many individuals in India.

Key Points Regarding Income Tax on Salary

• Taxable Income:** The amount of income on which tax is calculated. It is determined by deducting various allowances and exemptions from your gross salary.
• Tax Slabs:** The government divides taxable income into different slabs, each with a specific tax rate.
• Tax Deductions:** You can claim various deductions under different sections of the Income Tax Act to reduce your taxable income.
• Tax Rebates:** The government may offer rebates on tax payable under certain conditions.
• Tax Payments:** You can pay income tax through various modes, including TDS (Tax Deducted at Source) by your employer, advance tax payments, and self-assessment tax payments.

Example of Income Tax Calculation on Salary in India

• Assumptions:
• Individual: A salaried employee under the age of 60 years.
• Gross Salary: ₹15,00,000 per annum.
• Deductions:
• Standard Deduction: ₹50,000
 
• HRA: ₹2,50,000
• 80C Investments: ₹1,50,000
• 80CCD(1B) (NPS): ₹50,000
 
• 80D (Health Insurance): ₹15,000
• 80TTA (Interest on Savings Account): ₹10,000
 
• Calculations:
• Gross Total Income:
• Gross Salary: ₹15,00,000
• Deductions:
• HRA + LTA: ₹2,50,000
• Standard Deduction: ₹50,000
• Net Salary: ₹12,50,000
• Income from Other Sources (assumed): ₹10,000
• Gross Taxable Income: ₹12,60,000
• 80C Deduction: ₹1,50,000  
• 80CCD(1B) Deduction: ₹50,000  
• 80D Deduction: ₹15,000
• 80TTA Deduction: ₹10,000
• Total Deductions: ₹2,25,000
• Total Taxable Income: ₹10,35,000
• Tax Calculation:
• Tax on income between ₹2,50,000 to ₹5,00,000 (5% of ₹2,50,000): ₹12,500
• Tax on income between ₹5,00,000 to ₹10,35,000 (20% of ₹5,35,000): ₹1,07,000
• Total Tax: ₹1,19,500
• Cess: 4% of ₹1,19,500 = ₹4,780
• Total Tax Payable: ₹1,19,500 + ₹4,780 = ₹1,24,280
• Note:
• This is a simplified example. Actual tax calculations may vary based on individual circumstances and applicable tax laws. It's crucial to consult with a qualified tax professional or use the official Income Tax Department's online calculator for accurate and personalized tax calculations.
• Tax laws and rates are subject to change.
• Disclaimer: This information is for general guidance only and does not constitute professional tax advice.

Tax Slabs for Individuals (FY 2023-24 / AY 2024-25)

Income Range	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,000 - ₹5,00,000	5%
₹5,00,000 - ₹7,50,000	10%
₹7,50,000 - ₹10,00,000	15%
₹10,00,000 - ₹12,50,000	20%
₹12,50,000 - ₹15,00,000	25%
Above ₹15,00,000	30%

**Note:** This is a simplified overview. Tax laws and rates can change. Please refer to the official Income Tax Department website for the most accurate and up-to-date information.