Well here i would like to continue the earlier started post regarding the Salary Structure, i am trying to define here what different parts of your salary mean and how it is structured and taxed. I have already written Part 1 of the series and now want to continue with Part 2.
1. PF Contribution - Its something like a Social Security fund that you collect for your old age or maybe some emergency. It has a statuary requirement that a minimum of 12% of the basic is deducted and deposited in the Employee's Provident Fund. The employer also makes a matching contribution to the PF account. Here too a balance needs to be maintained, with the basic salary higher the PF contribution also increases which in turn can cause a reduction in take home salary.
2. Medical Reimbursement - This is the part of the salary where you get paid for the medical expenditure that you incur. It is tax free only upto Rs 15,000 a year. If you dont produce the bills for the amount, the sum gets added into the income for that year.
3. Leave Travel Allowance - The amount paid by the employer to you and your family for leave travel to any place in India or for travelling to any place in India after retirement. This amount is exempt from tax. If the journey is by rail, the amount of air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less, is not taxable. If the travel is by air, then the economy class fare is not taxable.
I will continue this series, but i really hope it is useful. Do give me your comments
Related Posts
Defining Salary Structure - Part 1
Defining Salary Structure - Last Part
Compare New and Old Income Tax Slabs
Income Tax Calculation Form
1. PF Contribution - Its something like a Social Security fund that you collect for your old age or maybe some emergency. It has a statuary requirement that a minimum of 12% of the basic is deducted and deposited in the Employee's Provident Fund. The employer also makes a matching contribution to the PF account. Here too a balance needs to be maintained, with the basic salary higher the PF contribution also increases which in turn can cause a reduction in take home salary.
2. Medical Reimbursement - This is the part of the salary where you get paid for the medical expenditure that you incur. It is tax free only upto Rs 15,000 a year. If you dont produce the bills for the amount, the sum gets added into the income for that year.
3. Leave Travel Allowance - The amount paid by the employer to you and your family for leave travel to any place in India or for travelling to any place in India after retirement. This amount is exempt from tax. If the journey is by rail, the amount of air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less, is not taxable. If the travel is by air, then the economy class fare is not taxable.
I will continue this series, but i really hope it is useful. Do give me your comments
Related Posts
Defining Salary Structure - Part 1
Defining Salary Structure - Last Part
Compare New and Old Income Tax Slabs
Income Tax Calculation Form
2 comments:
can you give me some more explanation for provident fund
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