Professional Tax: It is imposed on all individuals with an income, including salaried workers, professionals, and traders. Notably, under Section 80C of the Income Tax Act, your payment to the EPF up to a certain amount is tax-free. This portion of your pay-slip represents at least 12% of your basic pay and is deposited into an EPF account. Such allowances can be grouped as 'Other Allowances'' by an employer.‍ĮPF (Employees Provident Fund): This is a mandatory deduction from your paycheck and an accumulation of funds for your retirement. ‍ Other Allowances: This category includes all of an employer's additional allowances that the company may allow to its employees. The LTA exemption is available for two journeys in a block of four calendar years. However, there are certain restrictions to keep in mind. To claim this deduction, employees are required to submit proof of their journey. For example, the leave travel allowance provided is ₹25,000 but the expenses were ₹20,000. This allowance, provided by the employer, offers an income tax exemption on the actual travel costs. Leave Travel Allowance: LTA is a provision designed to cover the travel expenses incurred by employees and their immediate family members. Performance and Special Allowances: Employees are offered performance and special allowances to motivate them to perform better. Medical allowance is the amount of money given to cover the medical expenses of an employee.Įmployees are eligible for a standard deduction of up to ₹50,000 of conveyance & medical allowance for the financial year 2023-2024. Actual rent paid minus 10% of Basic salary + Dearness allowanceĬonveyance & Medical Allowance: Conveyance allowance is provided to an employee for covering expenditure incurred on the commute to the office.For people living in metro cities: 50% of Basic salary + Dearness allowance non-metro cities: 40% of Basic salary + Dearness allowance.HRA can help you save money on taxes.Īccording to rule 2A under Section 10 (13A), the one which amounts the least is exempted. The amount of HRA varies by location and ranges from 40 to 50 percent of base pay. ‍ House Rent Allowance (HRA): This is an allowance to assist people in paying their rent.

It is completely taxable and also acts as a foundation for calculating the other aspects of pay.ĭearness Allowance (DA): It is a percentage of your base pay that is granted to help offset the effects of inflation, it is fully taxable. ‍Basic Salary: This is the most essential component of your salary, accounting for up to 35 - 40% of your total pay. Helping you understand the key elements that contribute to your financial compensation. In this section, we will gain more clarity about the different components of a salary slip.

Us salary slip format