<keyword id="120759" type="PERSON" weightage="20" keywordseo="Gratuity">Gratuity</keyword> is a kind of benefit that an employer gives to the employees. The recent amendment that has been approved by the parliament has increased the maximum limit of gratuity that is taxable. As per the recent amendment in the taxation laws in India, gratuity is tax exempt up to Rs 20 lakhs. Earlier this ceiling was Rs 10 Lakhs. The taxation procedures for gratuity is covered by Section 10(10) of the Income Tax Act. Notification The CBDT Notification no. S.O. 1213(E), dated 8 March 2019, states that the tax exemption on gratuity to an upper limit of Rs 20 lakh is made available to employees if the employee resigns or disabled, or retires or dies on or after 29 March 2018. What is gratuity? The monetary benefit called as gratuity given by the employer to the employees is given under the provisions found in the Payment of Gratuity Act, 1972. Gratuity is paid to the employee in case of the following. Case-1: The employee retires from the organization after attaining the age of retirement or resigns from the organization. Case-2: superannuation meaning the employee attaining the age of retirement while still working in an organization. To qualify for gratuity in the two cases mentioned above, the employee must have completed 5 years of service in the given organization that is supposed to pay gratuity. Case-3: death or disablement of the employee due to an accident or disease )in this case, the time limit of 5 years that must be completed for qualifying for gratuity does not apply). Who is covered under gratuity All employees working in factories, mines, ports, railways, plantations, enterprises, shops, oil fields and educational institutions that have 10 or more employees on its rolls on any given day in the preceding 12 months are eligible to get gratuity. Once the gratuity law becomes applicable to the employer, the employees will invariably get gratuity even if the number of employees fall below 10 eventually. How to calculate the amount of gratuity that is tax exempted In the following cases, whichever is the least one is exempted from tax: <ul><li>Last salary drawn including basic X DA and the number of years employed X 15.26.</li><li>Rs. 20 lakhs</li><li>The gratuity amount actually received by the employee</li></ul>For example, let us consider Karthik is employed for 25 years and 2 months. The average salary for the last 10 months in his case is Rs. 90,000. The actual gratuity he will receive is Rs. 11 lakhs. Average of last 10 months’ salary: Rs.90,000 Number of years employed: 25 (rounded off to the nearest year). Gratuity amount receivable: 90,000*25*1/2 = 11,25,000 Maximum amount allowed for tax exemption: 10 lakhs as per the earlier taxation law Amount exempted from tax as per the rule of least of the three: Rs. 10 lakhs Resulting taxable gratuity: Rs 1 lakh Note: Karthik need not pay any taxes on his gratuity amount once his gratuity is dealt with by the amended taxation laws that permit Rs 20 lakh upper limit to gratuity.

How to calculate gratuity and is gratuity taxable?

In February 2019, the Central Government revised <keyword id="6354751" type="UNKNOWN" weightage="20" keywordseo="income-tax">income tax</keyword> slabs for different categories of taxpayers. To know your taxable income, you need to figure out in which tax slab you fall into and also know how to calculate the gross salary for which the taxes are applicable. Here we discuss the different steps of calculating the taxable income in 2019-20. Step-1: Know the current income tax slabs for different salary ranges: <table style="border-width: initial; border-style: none;"><colgroup></colgroup><col /><col /><col /><col /><tbody><tr><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#92d050;padding:3.75pt 3.75pt 3.75pt 3.75pt;overflow:hidden;overflow-wrap:break-word;">Income Tax slab </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#92d050;padding:3.75pt 3.75pt 3.75pt 3.75pt;overflow:hidden;overflow-wrap:break-word;">Tax Rate for Category-1: Resident and non-resident individual below 60 years. </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#92d050;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">Tax Rate for Category-2: Resident Indians who are in the age group of 60 to 80 years. </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#92d050;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">Tax Rate for Category-3: Resident Indians who are above 80 years of age. </td></tr><tr><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#f9f9f9;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">Salary up to Rs.2.5 lakh per annum </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#f9f9f9;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#f9f9f9;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">Nil </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#f9f9f9;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">Salary between Rs.2,50,001 and Rs.5,00,000 per annum </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">5% of the income which is more than Rs.2.5 lakh plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">5% of the income which is more than Rs.3 lakh plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;"> Nil </td></tr><tr><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#f9f9f9;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">Salary between Rs.5,00,001 and Rs.10,00,000 per annum </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;background-color:#f9f9f9;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">20% of the income which is more than Rs.5 lakh plus Rs.12,500 plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#f9f9f9;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">20% of the income which is more than Rs.5 lakh plus Rs.10,500 plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;background-color:#f9f9f9;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">20% of the income which is more than Rs.5 lakh plus 4% cess </td></tr><tr><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">Salary above Rs.10 lakh per annum </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:middle;padding:3.75pt 7.5pt 3.75pt 7.5pt;overflow:hidden;overflow-wrap:break-word;">30% of the income which is more than Rs.10 lakh plus Rs.1,12,500 plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">30% of the income which is more than Rs.10 lakh plus Rs.1,10,000 plus 4% cess </td><td style="border-left:solid #dddddd 0.75pt;border-right:solid #dddddd 0.75pt;border-bottom:solid #dddddd 0.75pt;border-top:solid #dddddd 0.75pt;vertical-align:top;padding:0.75pt 0.75pt 0.75pt 0.75pt;overflow:hidden;overflow-wrap:break-word;">30% of the income which is more than Rs.10 lakh + Rs.1,00,000 + 4% cess </td></tr></tbody></table> Step-2: Calculate your gross salary in the following way: Since the income tax rules in India charge taxes only depending on the gross salary, you must calculate your gross salary for knowing your taxable income. Know your CTC CTC or cost to company is the total amount that a company is spending on you. You will find that most companies mention CTC in your appointment letter. CTC will include the direct and indirect benefits the company gives you, your contributions towards savings, all kinds of allowances, incentives, bonuses, company given accommodation and others. Calculate your gross salary In the first place, know your CTC which will include the basic pay, allowances, incentives, bonus, all kinds of direct and indirect benefits that the company gives you. To calculate your gross salary, you must take out the EPF and Gratuity contribution from the CTC. Example-1: If your CTC is Rs. 4,00,000, your gross salary will be CTC minus (Gratuity + EPF) Gross salary: Rs. 4,00,000 minus (Rs. 21,600 - Rs. 18,326) = Rs. 3,60,074 Your gross salary is Rs. 3,60,074 Example-2: If your CTC is Rs. 6,00,000, your gross salary will be CTC minus (Gratuity + EPF) Gross salary: Rs. 6,00,000 minus (Rs. 32,400 - Rs. 27,489) = Rs. 5,40,111 Your gross salary is Rs. 5,40,111 Your taxable income Your gross salary is your taxable income. You need to apply it in the different tax slabs in order to know how much tax you need to pay.

How to calculate taxable Income in 2019-20 in old tax regime

With the last date to file your <keyword id="22335084" type="General" weightage="20" keywordseo="IT-returns" source="keywords">IT returns</keyword> inching closer every passing day, it's time you choose your <keyword id="19901478" type="General" weightage="20" keywordseo="income-tax" source="keywords">income tax</keyword> regime-whether you want to opt for the old one or go for the new regime. But why is it important to make this choice carefully? Under what circumstances can the <keyword id="19935168" type="General" weightage="100" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword> benefit you, and how does it differ from the old <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword>? Let's find out all about it The new tax regime was introduced in <keyword id="22335085" type="General" weightage="20" keywordseo="Budget-2020" source="keywords">Budget 2020</keyword> as a means to simplify tax calculations and offer concessional tax rates. So, unless you do not categorically opt for the old tax regime, the new tax regime is assumed as default, and hence, your income tax liability is calculated according to it. Also, if you fail to file your taxes till 31st July, you will have to go ahead with the new tax regime, since the option to choose old regime will not be available anymore. <h2> What are the tax rates under the new regime? </h2>Here's a quick snapshot of the applicable tax rates under the new regime: <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Income Slab </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax rates under the new tax regime </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to Rs 2.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Exempt </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 2.5 lakh to Rs. 3 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 3 lakh to Rs. 5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 5 lakh to Rs. 6 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 6 lakh to Rs. 9 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 9 lakh to Rs. 10 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 10 lakh to Rs. 12 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 12 lakh to Rs. 15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Above Rs. 15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody><tbody></tbody></table> <h2>What deductions does the new tax regime offer?</h2> Unlike its old counterpart, which had over 70 exemptions and deductions to bring down an individual's taxable income and hence, their tax liability, the new regime does not offer much deductions. Except for a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 and deductions for employer's contribution to your <keyword id="19919089" type="General" weightage="20" keywordseo="NPS" source="keywords">NPS</keyword>, there are only a handful of deductions allowed, which include: Transport allowance (if the individual is specially abled) Conveyance allowance (to meet cost of travel and tour) Perquisites for official purposes Interest on home loan paid for a rented property Then, there are specific exemptions with regards to voluntary retirement, leave encashment and gratuity that you can also avail under the old regime. The new regime offers a rebate of Rs 25,000 on income of up to Rs 7,00,000. This means that anyone whose total taxable salary does not exceed Rs 7 lakh annually can claim a rebate of up to Rs 25,000. But remember, you will not be able to avail common exemptions and deductions that are available under the old regime, which include health insurance premiums, investments in tax-saving FDs, ELSS, house rent agreement (HRA), leave travel allowance (<keyword id="20091793" type="General" weightage="20" keywordseo="lta" source="keywords">LTA</keyword>), PPF, EPF and more. So, if you live on rent, or are diligently saving your hard earned money across mutual funds, PPF and more, the new regime will not have much to offer you. <h2>When can new tax regime be better for you? </h2>But in case you do not want excessive deductions from your income, the new tax regime works better for you. It is simple and straightforward, and can work well for those who do not want to face documentation hassles while filing their ITR, since the old regime demands multiple investment proofs. Also, if your income is up to Rs 5,00,000, you can choose the new tax regime, given that the basic exemption limit (income up to which one does not need to pay any taxes) is slightly higher in new regime at Rs 3,00,000, as compared to Rs 2.5 lakh in old regime. Experts also note that if the total of all your deductions does not exceed Rs 1.5 lakh, new regime could be better for you. However, do not make this decision simply by looking at low tax rates. Assess your outflows and then the deductions and exemptions you are eligible under both the regimes. It is a good idea to also compare your income under both the regimes using IT department's tax calculator. Only then, take a final call.

All you need to know about the new tax regime

<keyword id="2012860" type="PERSON" weightage="20" keywordseo="net-salary">Net salary</keyword> is the take home salary that you will get after all the deductions, paying gratuity and EPF and the income taxes. Taxation laws in India require that the taxes are calculated on your gross salary. To know your net salary or take home salary, you must deduct the taxes payable as per your income tax from the gross salary. Here are the steps to calculate the net <keyword id="8399410" type="UNKNOWN" weightage="20" keywordseo="salary-in-india">salary in India</keyword> in 2019-20. Step-1 Know your CTC CTC which is cost to company is the total amount that a company is spending on you. You will find the CTC mentioned in your appointment letter in most cases. CTC includes the direct and indirect benefits the company gives you, your contributions towards savings, all kinds of allowances, incentives, bonuses, company given accommodation and others. Step-2 Calculate your gross salary To get your gross salary, you must subtract the EPF and Gratuity from the CTC. Case-1: The gross salary of X getting CTC of Rs. 4,00,000 is as follows: Gross Salary: CTC minus (Gratuity + EPF) Gross salary: Rs. 4,00,000 minus (Rs. 21,600 - Rs. 18,326) = Rs. 3,60,074 The gross salary of X is Rs. 3,60,074 Case-2: The gross salary of Y getting CTC of Rs. 6,00,000 is as follows: Gross Salary: CTC minus (Gratuity + EPF) Gross salary: Rs. 6,00,000 minus (Rs. 32,400 - Rs. 27,489) = Rs. 5,40,111 Y is getting a gross salary of Rs. 5,40,111 Step-3 Calculate your net salary Since net salary is the take home salary after paying your income tax, you must know your tax slab and calculate the taxes you will have to pay. Here let us understand how net salary is calculated in the above mentioned cases. Net Salary: Gross Salary minus (Income tax + Public Provident Fund + Professional Tax) Case-1: X is getting a gross salary of Rs. 3,60,074. The net salary in this case can be calculated as follows: From Rs. 2,50,000 to Rs. 5,00,000, taxes will be charged as 5% of the total income that is more than Rs. 2.5 lakhs plus 4% cess. X’s taxable income: 3,60,000 – 2,50,000 = 1,10,000. 5% of Rs. 1,10,000 = Rs. 5,500 4% cess of the income tax payable: Rs. 220 Total taxes payable: Rs. 5,720. Net salary: Gross Salary – taxes paid Net salary of X is 3,60,000 – 5,720 = 3,54,280. Case-2: Y is getting a gross salary of Rs. 5,40,111. The net salary in this case can be calculated as follows: Y comes in the tax slab of Rs. 5,00,001 to Rs. 10,00,000. In this case the income tax will be calculated as 20% of the total income that is more than Rs 5 lakhs + 12,500 + 4% cess of the income tax. Earning that is more than Rs. 5,00,000: 5,40,111 – 5,00,000 = Rs.40,111. 12% to 40,111: Rs.4,813 Add 12,500: Rs. 4,813 + 12,500 = Rs. 17,313. Cess (4% on the income tax): Rs. 692 Total taxes payable: 17,313 + 692 = Rs. 18,005 Net salary of Y: Rs. 5,40,111 – 18,005 = Rs. 5,21,995

How To Calculate Net Salary In 2019-20

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd"><html><body><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="https://www.usaa.com/inet/pages/advice_personal_finances_main?akredirect=true"><img src="https://static-ssl.businessinsider.com/image/551042156bb3f7065883609c-1200-924/military-family-usaa.jpg" border="0" alt="military family USAA" /></a>Getty</div></div></div>Fighting to protect our nation's sovereignty can be extremely trying, not only on those who serve in the military but also on their families.Fortunately, there are many ways the US government shows its appreciation for the sacrifices made by military men and women including, most notably, in tax benefits.Military members are eligible to receive a number of tax and retirement breaks that regular civilians don't qualify for.From selling your home to saving for retirement to filing your taxes, here are 11 tax benefits that military families have available to them.1. Retirement savings. Members of the military are allowed to put tax-free combat pay in their Thrift Savings Plan (TSP) or an IRA. For those in a combat zone, the total of allowable contributions to the TSP (Roth and traditional) is increased to $53,000. Money that goes into your traditional TSP tax-free will not be taxed when you withdraw the money, but you will need to pay taxes on earnings. Contributions to the Roth TSP are still capped at $18,000; at retirement, withdrawals of contributions and earnings come tax-free.If you plan on rolling over a traditional TSP with tax-free contributions, it may be best to create two separate rollover accounts: one for taxable contributions and earnings and one for tax-free assets.2. Filing extensions. If you're serving in the military you may qualify for a <a href="http://www.irs.gov/uac/Extension-of-Deadlines-%E2%80%94-Combat-Zone-Service">deadline extension</a> for several tax-related actions, including filing returns, paying taxes, making claims for refunds, and contributing to IRAs.3. Support for spouses. Before 2009, military spouses were typically required to pay income taxes to the states where their spouses were stationed. But thanks to the Military Spouses Residency Relief Act, military spouses only have to pay income taxes to the state they legally reside in.4. Remote filing. Joint returns usually need to be signed by both spouses. But if you're away from home and serving in the military, your spouse can be given power of attorney to file a joint return on your behalf. If your spouse is unable to sign the return because he or she is serving in a combat zone or is performing qualifying service outside of a combat zone, and you do not have power of attorney or other statement, you can sign for your spouse. Attach a signed statement to your return that explains that your spouse is serving in a combat zone. 5. Selling your home. Taxpayers can often avoid paying capital-gains taxes on the sale of a home if they owned and used it as their main residence for at least two of the five years before the sale. This rule can be used to exclude up to $250,000 in gains for individuals or $500,000 for married couples.Lucky for military members, the IRS provides flexibility. Military members can suspend the five-year test period for up to 10 years while on qualified extended duty (50 miles from home for 90 days or more). To learn more about the rules and if they apply to your situation, visit the <a href="http://www.irs.gov/uac/Highlights:--Military-Family-Tax-Relief-Act">IRS website</a> or consult a professional tax adviser.6. Moving deductions. Moving is expensive. Moving every few years - as many military families are forced to do - can be even pricier. That's why the IRS allows military members to deduct "reasonable un-reimbursed expenses" incurred while relocating your family and waives the time and distance test required for civilians to deduct moving expenses.7. Transition assistance. If you're transitioning back to civilian life, you could deduct certain costs associated with looking for a new job. Qualified expenses may include travel, resume preparation fees, and outplacement agency fees.8. Travel deductions. If you're called more than 100 miles away from home to perform Reserve duties you are eligible to deduct certain un-reimbursed travel expenses.9. Uniform costs. If you're prohibited from wearing certain uniforms when off duty - a rule most commonly applied to reservists - you may be able to deduct the costs to buy and maintain those uniforms. But keep in mind that you're required to reduce your expenses by the amount of any uniform allowance or reimbursement you receive.10. Waived penalties. A call to active duty can create a financial hardship for reservists. If the reservist withdraws funds from his retirement savings to cover expenses during this time, the IRS can provide accommodation.11. On base. Tax assistance to service members and their families is often provided through the <a href="http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers">Volunteer Income Tax Assistance Program</a>. Military members have free on-base access to IRS trained and certified tax preparers that are knowledgeable of military-specific tax issues.12. Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act). The HEART Act allows the eligible beneficiary of a military death gratuity or SGLI death benefit to contribute either to a Roth IRA or Coverdell Education Savings Account (ESA) as a qualified rollover contribution. The eligible beneficiary must complete the contribution within one year of receiving the death gratuity or SGLI death benefit.<a href="https://www.usaa.com/inet/pages/advice_personal_finances_main" target="_blank">To learn more about tax benefits, visit USAA's website</a>.USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers.No Department of <keyword id="6354810" type="ORGANIZATION" weightage="60" keywordseo="Defense">Defense</keyword> or government agency endorsement.Images do not represent any endorsement, expressed or implied, by the Department of Defense or any other United States government age.The contents of this document are not intended to be, and are not, legal or tax advice. The applicable tax law is complex, the penalties for non-compliance are severe, and the applicable tax law of your state may differ from federal tax law. Therefore, you should consult your tax and legal advisers regarding your specific situation.This post is sponsored by <a href="http://www.usaa.com/" target="_blank">USAA</a>.Find out <a href="http://www.businessinsider.com/sponsor-posts" target="_blank">more about Sponsored Content</a>.</body></html>Follow BI Studios on <a href="https://twitter.com/bi_studios_" target="_blank">Twitter</a> and <a href="https://www.facebook.com/BusinessInsiderStudios" target="_blank">Facebook</a>.

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