Income From Employment Calculation of taxable income

The general rule is that income from employment is gains and profits Particulars Amount
from employment. This means that included in income from employment is
salary, allowances, gratuity, benefits in kind and all other forms of remuneration or Assessable income from Employment xxxx
compensation for the employment. Assessable income from Business/Profession xxxx
All income derived by an employee from his employment are taxable unless Assessable income from Investment xxxx
specifically exempted under the Income Tax Act.
Total assessable income xxxx
“Paid by Employer / Office for the benefit of Employee / Worker” Less: Allowable deductions:
(a) Contribution to PF xxxx
(b) Donation xxxx
(c) Life Insurance Premium and Health Insurance Premium xxxx
(d) Remote area exemption xxxx
Calculation of Assessable income from Employment (e) Pension exemption xxxx
Of ………….. for Previous year (f) Disable person exemption xxxx
Particulars Amount (g) Foreign allowance exemption xxxx

Total taxable income xxxxx

♦ Salary, Wages, Leave pay, Overtime pay, Bonus and other
incentives xxxx
♦ Dashain allowance (Equal to one month salary) xxxx
♦ Contribution to Provident Fund by employer (10% of salary) xxxx Working Notes:
♦ Accommodation or Housing or Quarter facility (2% of salary) xxxx
♦ Vehicle facility (0.5% of salary) xxxx Contribution to PF:
♦ Prize and Gift related to employment xxxx 1/3rd of Total assessable income = ……..
♦ Dearness allowance, Entertainment allowance, Outstation OR, Maximum Rs. 3,00,000
allowance, Local allowance, Business promotion allowance, OR, Actual contribution to PF = ..…… (Whichever is less)
Children education allowance, Transportation allowance and other
allowances paid by employer xxxx *Note: Actual contribution to PF means contribution to PF by both employee and
♦ Reimbursement of personal expenses by employer xxxx employer with contribution to CIT if any.
♦ Amount paid for housekeeper, driver, gardener or domestic *Contribution to Unrecognized or Unapproved PF is not allowed for deduction.
workers by the employer xxxx
♦ Water, Electricity and Telephone bills of employee paid by Donation:
employer xxxx 5% of Adjusted taxable income = ………
♦ Interest benefit or Under payment of interest xxxx OR, Maximum Rs. 1,00,000
♦ Pension form previous employer xxxx OR, Actual Donation paid = …….. (Whichever is less)
♦ Payment for accepting restriction related to employment, Gain *Note: Adjusted taxable income = Total assessable income - Contribution to PF
due to change in the accounting system, Fees, Commission,
Advance salary received xxxx Life Insurance Premium and Health Insurance Premium:
Actual LIP or HIP paid = …….
Assessable income from Employment xxxxxx OR, Maximum Rs. 20,000 (Whichever is less)
 ►Personal and domestic expenses are not allowed for reduction.
Remote Area Exemption:
Area ‘A’ Rs.50,000
Area ‘B’ Rs. 40,000 Calculation of tax liability:
Area ‘C’ Rs. 30,000 For Individual Status
Area ‘D’ Rs. 20,000 Particulars Amount Income Range
Area ‘E’ Rs. 10,000
1st Upto Rs.3,50,000 @ 1% 1 - 3,50,000
Next Rs.1,00,000 @ 15% 3,50,001 - 4,50,000
Pension Exemption: Next Rs.21,50,000@ 25% 4,50,001 - 25,00,000
25% of Basic exemption = ……… Remaining balance @35% Above 25,00,001
OR, Actual pension income Rs…… (Whichever is less) Total tax liability xxxx
Less:
*Note: Basic exemption for Individual person is Rs. 3,50,000 and for Couple is Woman Rebate @ 10% xxxx
Rs. 4,00,000 Advance tax paid xxxx
Medical tax credit xxxx
Disable Person Exemption:
50% of Basic exemption Total tax payable xxxx

Foreign Allowance Exemption: Note: A woman having income from employment only can get 10% rebate on total
75% of Foreign allowance amount tax liability.

*Medical tax credit:

Incomes those are not included while calculating income from Employment: 15% of Approved medical expenses Rs…..
►Meeting allowance (Final withholding income) Or, Maximum Rs. 750 (whichever is less)
►Travelling and Daily allowance (Final withholding income)
►Income from part time job (Final withholding income) For Couple Status
►Agriculture income (Non taxable income) Particulars Amount Income Range
►Dividend from resident company (Final withholding income)
►House rent received for individual (Final withholding income) 1st Upto Rs.4,00,000 @ 1% 1 – 4,00,000
►Interest received from Bank, Interest on fixed and saving deposit for individual Next Rs.1,00,000 @ 15% 4,00,001 – 5,00,000
(Final withholding income) Next Rs.21,00,000@ 25% 5,00,001 - 25,00,000
►Gain form Investment insurance, Return from Mutual fund, Retirement fund etc. Remaining balance @35% Above 25,00,001
(Final withholding income) Total tax liability xxxx
►Reimbursement of expenses those are incurred for the purpose of business Less:
►Any meal, refreshments provided to all employees in equal term Woman Rebate @ 10% xxxx
►Any amount received from employer less than Rs. 500 Advance tax paid xxxx
►Pension/Income from foreign government Medical tax credit xxxx
►Casual income, Lottery, Windfall income (Final withholding income)
►Disable person allowance Widow allowance, Senior citizen allowance or Elder Total tax payable xxxx
allowance (Non taxable income)