Struggling with IT Deductions: Can Someone Explain Taxable vs. Non-Taxable Allowances?

It's been a long time that I'm breaking my head on IT. What's the limitation for male/female employees? Which allowances are taxable? What are non-taxable allowances? For example, if I have to pay an average of Rs. 1000/- per month for IT, for how much should I submit bills? What is Form 16 and its benefits? I have seen a lot of income tax calculators that helped me locate the amount to be paid, but still, I can't get a clear picture. Please explain in detail. Anticipating your valuable reply!!!

Regards,
Anoop

Dear Anoop,

Form 16
Certificate under Section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head "Salaries".

Income Tax Slabs 2011-2012 for General Taxpayers
- Income tax slab (in Rs.) Tax
- 0 to 1,80,000 No tax
- 1,80,001 to 5,00,000 10%
- 5,00,001 to 8,00,000 20%
- Above 8,00,000 30%

Income Tax Slabs 2011-2012 for Women
- Income tax slab (in Rs.) Tax
- 0 to 1,90,000 No tax
- 1,90,001 to 5,00,000 10%
- 5,00,001 to 8,00,000 20%
- Above 8,00,000 30%

Income Tax Slabs 2011-2012 for Senior Citizens (Aged 60 years but less than 80 years)
- Income tax slab (in Rs.) Tax
- 0 to 2,50,000 No tax
- 2,50,001 to 5,00,000 10%
- 5,00,001 to 8,00,000 20%
- Above 8,00,000 30%

Income Tax Slabs 2011-2012 for Very Senior Citizens (Above 80 years)
- Income tax slab (in Rs.) Tax
- 0 to 5,00,000 0%
- 5,00,001 to 8,00,000 20%
- Above 8,00,000 30%

Please refer to the following websites for all your IT queries:
- National Website of Income Tax Department of India - http://www.incometaxindia.gov.in
- Financeminister.in | India income tax calculator, India income tax slabs, Official government links, India Finance news - http://www.financeminister.in

Cheers!

Abhishek

Dear Abhishek, Is this 1.8 L the CTC of an employee? In my office, an employee was drawing 2.24 L P.A. up to March 2011. However, he didn't pay any amount for income tax until now. His salary has now been revised to 3.5 L from April 2011. He is now inquiring about the procedure regarding income tax with our accounts department. Does he have to pay the arrears, including from last year?

Thanks, Arun, for the attachment.

Regards,
Anoop

It's the net income.

e.g.

Gross Pay = ₹1,80,000/- p.a.
Less: Deductions / Investments = ₹50,000/- p.a.
Net Pay = ₹1,30,000/- p.a.

Hence, I am not liable to pay any tax as my net income is well within the taxable limit (i.e., ₹1,80,000/- p.a.). However, if an employee's net income exceeds the taxable limit, then it becomes the responsibility of the employer to deduct tax at source (TDS) accordingly.

Cheers!
Abhishek