About the Income from Salary category

Income Tax Income from Salary
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Conversations about Taxes on Salary, Components, Allowances & more

2

It is given in the section that employer contribution towards RPF,NPS, Approved superannuation fund in excess of ₹ 7.5 lakhs is taxable in the hands of employee.

Is the above limit of ₹ 7.5 lakhs applied per fund or aggregately ₹7.5 lakhs for all the three funds?

3

Hi @vaish

Please consider the following points

  • Up to Rs. 1 lakh of the employer’s contribution to a superannuation fund is exempt from tax. Any amount above Rs. 1 lakh will be subject to taxation.
  • An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of the Income Tax Act. 1961.
  • The contribution of an employer in excess of 12% of the employee’s salary will be considered a taxable benefit to the employee.

For a financial year if the total aggregate made in the EPF, NPS, and superannuation fund exceeds Rs 7.5 lakh, then it is essential to know how the taxable portion will be calculated.

4

pls answer in relation to the calculation of Taxable perquisite as per Rule 3B of Section 17(2)(vii) and 17(2)(viia)

5

Hi @vaish

The CBDT vide notification 1 dated March 05, 2021, prescribed Rule 3B to the Income-tax Rules, 1962 (Rules) therein providing a calculation mechanism for the purpose of section 17(2)(viia).

The formula given as per Rule 3B is as below:

**TP= (PC/2)R + (PC1+ TP1)R

Where,

TP = Taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the current previous year;

TP1 = Aggregate of taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the previous year or years commencing on or after 1st day April, 2020 other than the current previous year (See Note);

PC = Amount or aggregate of amounts of the principal contribution made by the employer in excess of Rs. 7.5 lakh to the specified fund or scheme during the previous year;

PC1 = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5 lakh to the specified fund or scheme for the previous year or years commencing on or after 1st day April, 2020 other than the current previous year (See Note);

R = I/ Favg;

I = Amount or aggregate of amounts of income accrued during the current previous year in the specified fund or scheme account;

Favg = (Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous Year + Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the last day of the current previous year)/2.

Explanation — For the purposes of this rule, “specified fund or scheme” shall mean a fund or scheme referred to in sub-clause (vii) of clause (2) of section 17 of the Act.*

Note: Where the amount or aggregate of amounts of TP1 and PC1 exceeds the amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous year, then the amount in excess of the amount or aggregate of amounts of the said balance shall be ignored for the purpose of computing the amount or aggregate of amounts of TP1 and PC1.

6

What is the Salary Structure of Bihar State Govt Employees?

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Hey @Pranab63,

The salary structure depends upon the department and the job position. Hence, we’ll be unable to provide a specific salary structure.

However, we will be more than happy to answer any tax-related queries you have.