Key Highlights of Budget 2023- Direct Tax
01 Feb 2023
For newly employed individuals, it is very important to utilize the benefits available as per Income Tax Act, 1961 to maximise their earnings. A brief example is presented below for reference in respect of Mr A (invests for tax planning) and Mr B (doesn�t invest for tax planning), living in New Delhi:
Particulars (in INR) | Mr A | Mr B |
Cost to Company (CTC) p.a. | 10,00,000 | 10,00,000 |
Break up of salary: Basic Pay | 5,00,000 | 4,00,000 |
Rent Paid | 3,00,000 with proper documents | 3,00,000 without proper documents |
Tax Calculation | ||
Taxable Salary (Net of employer contribution to PF) | 9,40,000 | 9,40,000 |
Less: Standard Deduction | (50,000) | (50,000) |
Less: HRA not taxable | (2,50,000) | - |
Less: Employee Contribution to PF | (60,000) | (60,000) |
Less: Deductions wrt tax planning investments | (90,000) | - |
Taxable Salary | 4,90,000 | 8,30,000 |
Taxes Paid | 0 | 81,640 |
Hence, everybody earning a salary of Rs 5 lacs or more should do proper tax planning.
Manoj Chhabra & Co. is a Delhi-based accounting, auditing, tax and management consultancy firm. It was established in 1995. Since its foundation, its growth has been continuous and accelerated in recent years.
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