Notes about Indian Government Tax

Income Tax Department of Government of India (GOI) collects tax from all the citizens whose earnings cross taxable amount.  Tax is collected for every financial year (April this year to March of next year).

All the public and private sector companies operating in India, deducts certain amount of employee salary toward tax every month in the form of TDS (Tax deducted at Source).  This simplifies tax collection to be systematic. 

Government of India (GOI) under Income Tax rules allows certain expenditures borne by citizens to be exempted from the tax calculations.  However, every citizen claiming exemption has to submit the respective expenditure proof in order to avail the tax exemption.  The tax exempted expenditures are:

1. House Rent: The least among the
   1. Actual H.R.A provided by company to the individual
   2. Rent > 10% of Basic
   3. 40% of Basic
4.  
5.  

1. Actual H.R.A 156,942 2. Rent>10% Basic 80,765 3. 40% Basic 156,941 (Least of above is exempt) 80,765