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Budget 2018 does not impact much your In-hand Salary

February 1, 2018 29163 Views
TAXMANN
Editorial Team

Budget 2018 does not impact much your In-hand Salary

The Finance Minister, Mr. Arun Jaitley, has presented a give-and-take Budget proposals for salaried persons. A Standard Deduction of upto Rs 40,000 is proposed from salary income. This additional deduction is givenin lieu of withdrawal of exemption of Transport Allowance of Rs. 19,200 per annum and Medical Reimbursement of Rs. 15,000 per annum.

Hence, the net benefit for the employees already claiming deduction for transport allowance and medical reimbursement will be just Rs. 5,800 (Rs. 40,000- Rs. 19,200- Rs. 15,000).

If your annual CTC is Rs. 12,00,000, the impact of this proposed amendment on your take home salary is explained as under:

PARTICULARS Gross Salary
Rs. 12,00,000
After Budget Before Budget
Basic Salary (50% of Gross Salary) 6,00,000 6,00,000
Add: Allowances
Special Allowance 2,61,000 2,61,000
HRA** (50% of Basic Salary) ** Assuming an employee incurs 20% of his gross salary to pay rent for his house 3,00,000 3,00,000
Children Education Allowance 1,200 1,200
Children Hostel Expenditure Allowance 3,600 3,600
Medical Reimbursement 15,000 15,000
Transport Allowance 19,200 19,200
Gross Salary (A) 12,00,000 12,00,000
Taxable Salary (B)* 9,75,200 9,81,000
Less : Deductions (C)
A. Section 80C 1,50,000 1,50,000
(Insurance Preimum, Children School Fees, Post Office Scheme, etc.)
B. Section 80D 25,000 25,000
(Medical Insurance Premium)
Taxable Income (D) = (B - C) 8,00,200 8,06,000
Total Tax Liability (E) 75,442 75,911
TDS per month (E)/12 6,287 6,326
In Hand Salary Per Month 93,713 93,674
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