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 |
Business So Simple 