Exempt Allowances

by Gopal Gidwani on December 21, 2009 · 8 comments

in Taxation,Uncategorized

Exemptions: Certain components of the salary that an individual receives are exempt from income tax. Some of these components are:
Medical Allowance: An individual can claim exemption for upto INR 15000 in a financial year for medical reimbursement received from the employer.
Transport Allowance: Transport allowance of upto INR 800 a month is exempt from income tax.

{ 8 comments… read them below or add one }

Saurav Sinha November 18, 2010 at 7:48 pm

Hello Sir,
Can U plz help me in calculating my taxable income?
1) My salary is Rs 630000 pa & I have not taken any home loan etc. As per prevailing IT slab is it 10% or 20%? Plz explain me in detail coz I always get confused when I try doing it myself. Rs 160000 is exempted I guess so balance is difference of my annual salary & Rs 160000 which is Rs 470000. So this I guess is my taxable income. Now I am allowed to further save Rs 100000 (I am considering only section 80C). Here comes the confusing part. Suppose I invest around Rs 80000 in ULIPs/ELSS/PPF etc & my EPF will be balance, does that imply that my taxable income stands at Rs 370000??

2) When we file IT return what exactly is done with it by IT department? I checked NSDL website http://www.tin-nsdl.com & clicked on ” status of tax refund.”
After entering my PAN no & Financial year 2009-2010 there was no refund!!! What to do in such cases as I had already invested in section 80C components?



Gopal Gidwani November 22, 2010 at 5:31 pm

Hi Saurav,
Here is how your tax will be calculated.
Total income = Rs 6,30,000
Upto Rs 1,60,000 is exempt for males.
So remaining income = Rs 6,30,000 – Rs 1,60,000 = Rs 4,70,000
Under Section 80C you can invest upto Rs 1,00,000
This includes your Rs 80,000 in ULIPs/ELSS/PPF etc and Rs 20,000 in EPF. I dont know how much is your EPF. You have mentioned it as Rs 20,000 so I am taking it as Rs 20,000. EPF also comes under Section 80C. So if we reduce Rs 1,00,000 from the taxable Rs 4,70,000 it will come to Rs 3,70,000.
So your net taxable income is Rs 3,70,000.
Out of this Rs 3,70,000 the first Rs 3,40,000 will be taxed at 10% which will be Rs 34,000.
The next Rs 30,000 will be taxed at 20% which will be Rs 6,000.
So your total tax liability as per the salary amount and the investment amount that you have told me will be Rs 40,000. You will have to add Education Cess to this and arrive at the net tax amount payable.
I hope I have answered you query. If not then please write back to me.
Best Regards
Gopal Gidwani


DEEPAK YADUVANSHI April 4, 2012 at 12:34 pm

Hello Sir,

I am a student of BITS-Pilani. I will be joining a MNC in July 2012.
My gross compensation is Rs. 630,000.
It includes following components ( PER ANNUM)
Transport Allowance Rs. 24,000
Medical Allowance Rs. 15,000
Bonus Rs. 52,000
Joining Bonus Rs. 26,500 ( One Time )
HRA Rs. 109,000
EPF Rs. 14,800

I do have an educational loan of Rs.295,000
I do not have any LIC policy
I am ready to take a home loan if that component can save my tax
Please suggest me various ways by which I can save my income tax

How I should plan my investment from the very first day of my career so that I can save maximum tax.
Please help me

Thanks in advance

Thanks & Regards
Deepak Yaduvanshi
+91 9540166214

BITS- Pilani


Gopal Gidwani April 11, 2012 at 7:33 am

Hello Deepak,
First of all congratulations for your new job. I wish you all the best for your future.

With regards to your query. I will suggest you buy pure term life insurance cover. Build an emergency fund to cover your 3 – 6 months income. For saving tax you can invest in Public Provident Fund. To take care of your other goals and wealth creation invest in diversified equity funds with a long term horizon of minimum 5 years.

With regards to Home Loan, since this is your first job, banks will be hesitant to give you loan for the 1st six months to 1 year without a guarantor. So first you need to stablise in your job, before applying for a home loan.


Deepak Yaduvanshi April 16, 2012 at 7:31 am

Thank You Sir,

Your reply was really really helpful in planning my investment and saving my tax.

Thanks a lot once again.

Deepak Yaduvanshi
+91 9540166214

BITS- Pilani


Dafda Vijay January 5, 2013 at 2:31 pm

Dear Sir,

I have to fill online ITR but i dont know travel allowances comes in which catagory of IV A like is it come in 80 C or 80CC like……

Please help me


neha February 27, 2014 at 12:35 pm

can i get medical allowance exemption if it is paid for medicines for my parents.


Gopal Gidwani March 2, 2014 at 9:21 am

Hello Neha,

Yes you can get medical allowance exemption for medical bills submitted for treatment of self and family members. Here family members include spouse, children, parents etc. So you can avail the benefit of medical allowance exemption if the medical bills are for treatment of your parents. The maximum limit a person can avail of under the medical allowance exemption is Rs. 15,000


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