Answers to 22 Hot Trending Salary Questions for Jul 31, 2023 Tax Return.

So, you're wondering what counts as salary income?

Well, it's not just the cash you receive. It's anything you get from your employer, whether it's in cash, kind, or a facility.

Below are 19 hot trending salary questions tailored for you. If you've any other question then ask us. We're here to answer them all.

1 - What are allowances?

These are fixed amounts you get from your employer to meet specific needs. There are three types: taxable, fully exempted, and partially exempted. For example, your uniform allowance is exempt to the extent you spend it for official purposes.

2 - If your employer reimburses your grocery and children's education expenses, is it considered income?

Yes, these are income. They're perquisites and you should value them as per the rules.

3 - If you've worked with multiple employers and none deducted tax, do you have to pay taxes?

If your combined income exceeds the basic exemption limit, you'll have to pay self-assessment tax and file the return of income.

4 - Is pension income taxed as salary income?

Yes, it's taxed as salary income. But if you're receiving a pension from the United Nations Organisation, it's exempt. Family pension, on the other hand, is taxable as income from other sources.

5 - Are retirement benefits like PF and Gratuity taxable?

Gratuity and PF receipts on retirement are exempt for Government employees.

For non-Government employees,

-> gratuity is exempt up to Rs. 20,00,000 and

-> PF receipts are exempt if you receive it from a recognised PF after continuously serving for over 5 years.

However, if you contributed over Rs2,50,000 to statutory or recognised provident fund in any year, then you'll not get exemption on the interest income over the excess contribution.

And if your employer isn't contributing then please read ₹2,50,000 as ₹5,00,000.

6 - Are arrears of salary taxable?

Yes, they're taxable. But you can avail the benefit of spread over of income to the years to which it relates for lower incidence of tax.

7 - Is leave encashment taxable?

It's taxable if received while in service. At retirement, it's exempt for Government employees and subject to a limit of Rs. 3,00,000 for non-Government employees.

8 - Are receipts from life insurance policies on maturity along with bonus taxable?

The receipts from life insurance policies on maturity along with the bonus are generally exempt from tax under Section 10(10D) (of Income Tax Act, 1961), 1961.

However, this exemption is subject to certain conditions.

-> For policies issued after April 1, 2003, but by March 31, 2012, the premium paid must not exceed 20% of the sum assured for the receipts to be tax free.

-> For policies issued on or after April 1, 2012, the premium must not exceed 10% of the sum assured. If the premium exceeds these limits in any year, the maturity proceeds will be taxable. The proportion of the bonus received on such maturity would also be taxable.

9 - Is ex-gratia received from employer taxable?

If it's because of injury or death while on duty, it's not taxable.

10 - What is the taxability of House Rent allowance (HRA)?

You'll get nil HRA exemption if you opt for the new tax regime.

In case of the old tax regime, HRA is exempt up to the least of:

-> actual HRA received,

-> rent paid less 10% of salary,

-> or 50% of salary (40% for non-metro cities).

11 - What is the taxability of Fixed Medical allowance?

It's fully taxable.

12 - What is the taxability of the Conveyance allowance?

It's exempt to the extent of the amount received or spent, whichever is less.

13 - Is standard deduction applicable to all employees?

Yes, it's available to all employees, including pensioners, up to Rs. 50,000 or the amount of salary/pension, whichever is lower.

14 - Can an employee claim transport allowance as an exemption?

No, not from A.Y. 2019-20. However, certain disabled employees who can claim Rs. 3200 p.m, exemption.

15 - Is standard deduction applicable to family pensioners?

No, they can't claim standard deduction as it's taxable under the head income from other sources.

16 - What is Form 12BB?

It's a form you furnish to your employer for estimating your income or computing the tax deduction at the source. You should carefully attach the proofs for your deduction claims, for example House Rent Allowance, Leave travel concession, Interest on home loan, etc.

17 - When is relief under section 89 (of Income Tax Act, 1961) available?

It's available if you've received a salary or family pension in arrears or in advance, gratuity over exemption, compensation on termination of employment, or commuted pension over exemption.

18 - What is the effective date of enhancement of limit of gratuity from Rs 10 lakh to 20 lakh?

It's effective from 29 March 2018 for employees covered under Payment of Gratuity Act, 1972, and from 08-03-2019 for others.

19 - What counts as salary income?

It's not just the cash you receive. It's anything you get from your employer, whether it's in cash, kind, or a facility.

20 - Can I ask my employer for form 16 if he deducted no tax from my salary?

No, your employer will not issue form 16 because he can issue form 16 only if he has deducted some tax from your salary. You can ask him to issue "Salary Certificate".

21 - Who issues form 16 in pension cases received from the bank?

Bank will issue form 16.

22 - I've a negative income from house property. Will my employer reduce it from my taxable salary for computing my TDS?

If you chose the new tax regime, then your employer won't reduce your negative income.

However, if you chose the old regime, then yes, your employer will reduce your loss up to ₹2,00,000 from your taxable salary.

Remember, this is a simplified narrative of the complex world of salary income taxation. Always consult a tax professional for advice tailored to your specific situation.