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Taxability of Salary, Allowances and Deductions

Jun 15, 2020

As the new financial year i.e. FY 2020-2021 is going to start, there is in mind of every salaried individual about their tax planning and where to invest to reduce the tax liability efficiently. Most of the taxpayer in India regularly have following most worrisome thought every financial year:

  • What are the schemes that can provide deductions while computing the income?
  • What should be the salary structure?
  • Which incentive or perquisite is taxable and which are nontaxable?
  • What will be the impact of union budget on tax planning?

It’s high time to plan your tax savings referring to new union budget i.e. budget 2020. It’s time to know about deductions, exemptions provided under income tax act, investments which can provide us deductions to reduce the liability of income tax.

We INMACS via this article attempts to bring you all the much needed clarity over the all provision relating to salary income and deductions thereon. We hope the readers would find this article informative and helpful in their tax planning.

In Budget 2020, the Income Tax Department has introduced a distinctive concept of new tax regime by way of inserting Section-115BAC. Accordingly from FY 2020-21(AY 2021-22) onwards the individual and HUF not having any income under the head PGBP shall have an option to choose between the new and the old tax regime. Both regimes have separate tax slabs and rates along with separate deductions/exemptions and have different benefits. Both the options are mutually exclusive and taxpayer can opt for any one tax regime best suitable for him/ her.