Do you earn income from salary?
Then you must be worrying about filing your ITR 1 form FY 2017-18.
Well, it’s a topic worth worrying coz of new salary details asked by the Income Tax Department.
Till FY 2016-17, while filing income tax return (ITR), the only details required were of gross salary/ pension income.
But from FY 2017-18, new ITR 1 Sahaj Form asks for detailed salary break-up.
You do not have to worry anymore. After reading our blog, you’ll be able to calculate every component on your own very easily.
Before we begin, let’s see what all salary details are asked. Attached below is a screenshot of actual online ITR 1 form.
Now, let us discuss these salary details one-by-one.
(i) Salary (excluding all allowances, perquisites & profit in lieu of salary)
You must have received Form 16 from your employer by now and it’s very easy to calculate this amount from your Form 16.
In case, you don’t know what is Form 16, we are here to help.
Form 16 is nothing but a simple TDS certificate. It acts as a proof that tax has been deducted from your salary & deposited to government on your behalf. For detailed read, you can refer to our Form 16 guide.
Form 16 provides detailed break up of your salary under Part-B. Further, an Annexure providing salary detail in-depth is provided.
If your Form 16 has Annexure attached with it, then from the Annexure you can easily pick “Basic Salary”. This will form value of component (i).
If there is no annexure attached, then Gross Salary as per Form 16 Part-B will become your component (i).
(ii) Allowances Not Exempt
Allowance Not Exempt in simple words mean, taxable allowances.
First, from your Gross Salary reduce the amount calculated in (i). If Gross Salary is your value under (i) then no need to make this reduction.
The balance amount is your total allowances (i.e. taxable & exempt). From this, reduce all the exempt allowances. Some common examples can be Conveyance allowance, HRA, medical reimbursement etc. Balance left will represent “Allowances Not Exempt”.
(iii) Value of Perquisites
You can pick this value directly picked from your Form 12BA. If your total salary includes component of perquisites, then Form 12BA will be provided along with Form 16.
(iv) Profit in Lieu of Salary
Similar to (iii), any amount representing “Profit in lieu of salary” will be available in Form 12BA. Simply pick this value from your Form 12BA.
(v) Deduction under section 16
There are many people out there who asks, professional tax comes under which section?
Professional tax comes u/s 16 along-with one more component called “entertainment allowance”.
Professional tax is levied on every individual who earns income through any medium. But you should not confuse term “professional” with only doctors, lawyers etc. This tax is for every income earning person.
As per law, maximum of ₹2500 can be deducted from your salary as professional tax. Hence, maximum deduction available is also ₹2500.
For entertainment allowance, there are some restrictions. Exemption under this allowance is only given to government employees.
In simple words, anyone can receive entertainment allowance but deduction u/s 16 will be given only to government employees.
Maximum amount of deduction will be, least of
Actual Entertainment Allowance received
20% of salary (excluding any other allowance, perquisite or benefit)
Sum of all the above values i.e. (i), (ii), (iii), (iv) & (v) becomes your taxable salary income for FY 2017-18.
We hope, now you too can help your friends & family in computing their Salary details.
Also, it’s a common knowledge that while filing your ITR online with income tax India portal, session timing is only 15 minutes.
So we recommend you to do all the calculations well in advance or you can file ITR through Tax2Win, where no such session timing exists. 🙂
Visit our website & file your income tax return Sahaj Form 1 for FY 2017-18 absolutely FREE!
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