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Tax Benefits to Salaried Employees

Being a salaried employee has its perks. No, not just your salary, there are also tax benefits that you can enjoy as a salaried employee. Whether you are working for a startup or an MNC, as a salaried employee you can enjoy the following tax benefits:

Of course, when we are talking about benefit from Income tax, we expect to talk about

Deductions under chapter VI of Income Tax Act 1961, Like 80C, 80D, 80G, 80GG etc,

However, employees can take benefit out of their salary structure, which we are discussing here:


  1. House Rent Allowance (HRA) Exemption for Salaried Employees

House Rent Allowance (HRA) is often claimed by salaried employees who stay on rent. Usually, companies include this benefit on the salary structure. However, if you are staying in your own house then you won't be able to avail House Rent Allowance (HRA). House Rent Allowance (HRA) is one of the most useful benefits given by a company to a salaried employee and is rather easy to claim.

  1. Income Tax Exemption on Leave Travel Allowance for Salaried Employees

Leave Travel Allowance is given by many employers to their employees. Basically, an amount is added in the salary structure by the employer for the purpose of going on a vacation with family, by the employee and tax benefit is allowed for this purpose. Usually, the amount given by the employer is exempted from taxes. However, if the vacation is outside India then taxes would be applicable.

  1. Exemption on Encashment of Leaves for Salaried Employees

Every organization grants certain days of leaves to salaried employees (usually, 12-15 in a year). If a salaried employee wants to, then she or he can encash on these by the end of the year, if they have not been availed. The amount that is encashed for these leaves would usually be exempted from all taxes, subject to ceiling Limit of Rs. 3,00,000/-.

  1. Tax Exemption from Pension Income for Salaried Employees

After retirement, many companies pay pension to their salaried employees. Usually, pensions are of two types; commuted and un-commuted. In a commuted pension, the entire amount is given in a single time. While, for un-commuted pension, the entire amount is given in installments. For both cases, taxes are exempted up to a certain limit.

  1. Income Tax Exemption on Gratuity for Salaried Employees

Now, the simplest way to put gratuity would be to say that it is a gift. An employer gives this gift to a salaried employee, for her or his past performances. Gratuity may be received by the salaried employee himself at the time of his retirement or the legal heir of the salaried employee at the time of her or his death. This gratuity for salaried employees is exempted from all income taxes, subject to a ceiling limit of Rs. 10,00,000/-.

  1. Income Tax Exemption on VRS Received for Salaried Employees

Under Section 10 (10C), when a salaried employee takes an early retirement (before the age of 60) or voluntary retirement, she or he may sometimes receive a certain amount of money from the employer. That amount is usually exempted from all taxes.

  1. Exemption of Various Allowances for Salaried Employees

Various allowances like Children Education Allowance and Transport Allowance are also given to salaried employees. These allowances are also exempted of all types of income taxes, up to a certain limit.

This is all that we had to share regarding the tax benefits that are given to salaried employees. If you wish to know more about the tax benefits that are given to salaried employees in Bangalore, then you can contact us here.