Explained: Exemptions And Deductions For Salaried Employees

Do you have queries related to direct income tax?

Anil Rego, CEO, Right Horizons (external link), answers your personal income tax queries.

Shishir Aima: Dear Sir, I have purchases shares of Paytm (one 97 communications) in February 2022. Can I claim it under the income tax exemption under section 80 (c) or any other relevant section? Please guide.

Anil Rego: No, the investment towards share doesn’t qualify for any tax deductions. You cannot claim the same in any section. However, if you sell it at a loss, you can set of this loss from capital gains.

Amit: Can you provide best salary structure for person drawing CTC above Rs 15 lakh per annum, with best options in exemption, deductions, and rebates?

Anil Rego:

1. There are various options to claim exemptions under section 80C by investing a maximum of 1.5 lakh into various investment option like insurance premiums, PPF, EPF, senior citizen savings scheme, home loan principal, Sukanya Samriddhi yojana (if you have a girl child), 5 years tax saving FD, ELSS MF, NSC etc.
2. You can claim Rs 50,000 deduction in addition to section 80C by investing in NPS under section 80CCD.
3. You can also avail health cover for self and family and claim deduction under section 80D (if you are below 60 years, you can claim maximum of Rs 25,000; if your parents are above 60, you can claim for up to Rs 50,000)
4. You can claim up to Rs 2 lakh under section 24 if you have a home loan. The home loan interest can be claimed up to Rs 2 lakh
5. There is also a standard deduction of Rs 50,000
6. Overall you can claim a maximum of Rs 4.75 lakh deduction with the above mentioned options
7. You can also claim deduction on any charity made towards recognised organisations

Exemptions that you can also claim:

1. You can claim HRA on Actual HRA received by employer or 50% or 40% of the basic salary depending upon a metro or a non-metro location, respectively or Rent paid minus 10% of basic salary (lower of any of this is taken into consideration)
2. Leave Travel Allowance: This can be claimed on 2 trips in a block of 4 calendar years. In case no claim is made in a block, individuals can carry it over to the next block. You need to check your eligibility for LTA. The LTA amount will be subjected to the salary structure provided by the employer.
3. Exemption on perquisites like car, mobile bill, food coupons
4. Other exemptions like children education allowances are also applicable

All these exemptions will have limits which is uniform or based on your salary

Kalyan Kumar Banerji: A very old friend of mine lost his wife in January this year. The deceased had interest income and some income tax has been deducted. Some refund of tax is expected. I generally help them to file their ITR. My questions are:

1. Can the husband file ITR and sign as representative?

Anil Rego: In case of a deceased person, the return on any income needs to be filed by legal heir. In this case, if husband is the legal heir, then he needs to file the ITR.

The legal heir will have to register himself as representative assessee on the income-tax portal available under 'Authorised Partners' tab. For this you need the login details of the deceased person.

So, the legal heir will have to create a request and follow the steps provided on the portal, upload required documents and submit the request. Post verification, they either accept or reject the request. The legal heir will be allowed to file return post acceptance. The filing will be in the similar way applicable for any individual with interest income

2. The name of deceased has been deleted from the joint bank accounts. Can the refund be credited to an account of the husband? The
account number will remain as it was in the last ITR.

Anil Rego: Once the above-mentioned process is completed, while filing the return, the bank account number that he wishes can be incorporated for the refund and then the refund will be credited to the account of the legal heir.

You can find more of Mr Rego's answers here.

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