Does my salary include pension?
If the pension is received from your current or former employer, it’s treated as salary income. But if the pension comes from a life insurance policy, it’s taxed under "Income from Other Sources".
What is an allowance in salary?
Allowances are extra amounts paid by employers for specific purposes like house rent or travel.
Are all allowances taxable?
Most allowances are taxable unless exempt under the law. For example, HRA and LTA have specific exemptions under Section 10.
What is House Rent Allowance (HRA)?
HRA is given to employees to help with rent expenses. You can claim exemption if you actually live in a rented house.
Can I claim HRA if I live with my parents?
Yes, you can. But only if your parents own the house and you have a rental agreement and pay rent regularly. Your parents will need to show this rent as their income.
Can I claim HRA if I pay rent to my wife?
No. Such arrangements are often seen as artificial and not accepted for tax exemptions.
Is HRA allowed under the new tax regime?
No. HRA exemption is only available under the old regime.
What is Leave Travel Allowance (LTA)?
LTA is given for travel within India with your immediate family. You can claim it only if you actually travel and submit travel bills.
Can I claim LTA if I travel with friends or cousins?
No. LTA is valid only for travel with spouse, children, and parents—not other relatives or friends.
What are perquisites in salary?
These are additional non-cash benefits like cab services, food coupons, or health insurance provided by the employer.
Are perquisites taxable?
Yes. They are treated as part of your salary. But some are exempt depending on their nature.
What is bonus or performance incentive?
It’s extra payment based on your work performance. It's fully taxable.
What is the standard deduction in salary?
A flat amount deducted from your salary income before tax.
- ₹50,000 under old regime
- ₹75,000 under new regime (Section 115BAC)
What is professional tax?
It is a tax charged by state governments, usually up to ₹2,500 per year. It is deducted by your employer and allowed as a deduction under old regime.
What is Provident Fund (PF)?
Both employee and employer contribute 12% of basic salary every month. It’s a retirement saving tool.
Is PF taxable?
No, generally PF is exempt until withdrawal. But if you withdraw before 5 years of service, TDS is applicable.
What is CTC?
CTC (Cost to Company) is the total value of everything your employer offers you—salary + bonuses + benefits.
Is my entire CTC my take-home salary?
No. Your take-home is after deducting PF, taxes, professional tax, etc.
What is taxable salary?
It is the portion of your salary on which tax is calculated, after deductions and exemptions.
What is Form 16?
It’s a certificate given by your employer showing your salary income and TDS deducted. It's needed for filing ITR.
What is Form 26AS?
It is a summary of all tax deducted or paid by you, available on the income tax website.
What is AIS (Annual Information Statement)?
AIS shows your complete financial activity – like income, investments, cash deposits, credit card payments, etc. Check it before filing returns.
Are arrears of salary taxable?
Yes. But you can claim relief under Section 89 to reduce tax burden.
What if I receive salary in advance?
It is taxable in the year of receipt, but you can claim Section 89 relief.
Can I set off house property loss against salary?
Yes. But only up to ₹2 lakh in a year.
Can I set off business losses against salary?
No. Business losses cannot be set off against salary income.
Can I claim the ₹2.5 lakh basic exemption for each job if I had 2 jobs?
No. The exemption applies to your total annual income—not separately for each employer.
What if both employers didn’t deduct TDS due to low salary?
If your total income is taxable, you must pay tax yourself as Self Assessment Tax.
Which ITR form should a salaried person use?
ITR-1, if your income is up to ₹50 lakh and you have only one house property.
What is gratuity?
A lump sum benefit given on retirement or resignation after 5 years of service.
Is gratuity taxable?
It depends:
- Fully exempt for government employees
- Partially exempt (up to ₹20 lakh) for others based on certain rules
What is pension?
Pension is a retirement income. It can be monthly (uncommuted) or lump sum (commuted).
Is pension taxable?
Yes. Uncommuted pension is fully taxable. Commuted pension may be exempt based on whether you’re a government or private employee.
Is pension received by family members taxable?
Yes, under "Income from Other Sources". But some part may be exempt (₹15,000 or 1/3rd of pension, whichever is lower).
Is pension from the Armed Forces taxable?
No. It is fully exempt.
What is voluntary retirement compensation?
If you retire early and get a lump sum, it is exempt up to ₹5 lakh under Section 10(10C), subject to conditions.
Can I claim both relief under Section 89 and exemption under Section 10(10C)?
No. You can claim only one.
What are the 5 heads of income under Income Tax?
- Salary
- House Property
- Business or Profession
- Capital Gains
- Other Sources
What is gross total income?
It is the sum of income from all 5 heads before deductions.
How is income tax calculated?
Add all income → Deduct exemptions & deductions → Apply tax slabs → Add cess = Tax payable.
What is the difference between old and new tax regimes?
Old regime allows more deductions like 80C, HRA, etc.
New regime offers lower tax rates but fewer deductions.
What are current new regime slab rates (FY 2025-26)?
- Up to ₹4 lakh: Nil
- ₹4–8 lakh: 5%
- ₹8–12 lakh: 10%
- ₹12–16 lakh: 15%
- ₹16–20 lakh: 20%
· ₹20–24 lakh: 25%
- Above ₹24 lakh: 30%
What is Section 80C?
It allows a deduction of up to ₹1.5 lakh for investments like PF, LIC, ELSS, PPF, etc.
What is Section 80D?
Deduction for medical insurance premiums.
What is Section 80E?
Deduction for education loan interest.
What is Section 80U?
Deduction for disabled individuals.
What is Section 80GG?
Deduction for rent paid if HRA is not received.
What is TDS on salary?
Your employer deducts tax from salary every month and deposits it with the government.
What happens if my employer doesn’t deduct TDS?
You are responsible for paying the tax yourself before filing your return.
Do I have to file ITR even if TDS is deducted?
Yes. TDS is just advance tax. You must still file your Income Tax Return.
Can I get a refund of excess TDS?
Yes. File your ITR and claim the refund if excess tax was deducted.
What is rebate under Section 87A?
If your total income is below ₹12 lakh (FY 2025-26 under new regime), you get a rebate of up to ₹60,000—resulting in zero tax.
Do senior citizens have a higher exemption limit?
Yes.
- Above 60 years: ₹3 lakh
- Above 80 years: ₹5 lakh under old regime
What is Health and Education Cess?
It is 4% of your total tax, added over and above the slab rates.
Is it compulsory to compare old vs new tax regime every year?
Yes. It’s advisable to compare and choose the better one based on your income and deductions.
✅ Conclusion:
Salary income involves many components—allowances, perquisites, retirement benefits, and tax deductions. To pay the right tax and claim maximum benefits, it’s important to understand each part.