Am salaried earning around 50k per month, apart from this am getting a remuneration of Rs. 6000/- per month under section 194J, the company says its mandatory to deduct tax of 10%. Is there any form which can be submitted, so that 10% is not deducted on monthly remuneration. Am not attracting any tax as have home loan, tution fees , investments, medical insurance and NPS.

Ans: Yes, for the coming year, based on the budget you need not pay any tax and without any savings.

Ans: If rent and electricity is paid by the company, it is considered as perquisites. To save tax, you can invest additional 40k in NPS, you can pay additional mediclaim premium.

Ans: Hello Rayees,

I understand your query about the tax exemption on the gratuity amount you're receiving as part of your monthly salary.

Gratuity is a benefit given by the employer to employees. As per the recent amendment, gratuity is now tax-exempt up to Rs 20 lakh, which is an increase from the previous limit of Rs 10 lakh. This comes under Section 10(10) of the Income Tax Act.

However, it's important to note that if an employee receives gratuity during his service, then it is fully taxable as income under the Income Tax Act, 1961. The exemption applies when the gratuity is received at the time of retirement or termination, not during the service period.

I would recommend consulting with a tax advisor or a chartered accountant to understand how this applies to your specific situation and to plan your taxes accordingly.

I hope this information is helpful to you.

Best Regards.

Ans: Understanding Employer Contribution to Provident Fund for Basic Salary Below Rs 15,000
When your basic salary is less than Rs 15,000 per month, there are specific guidelines for employer contributions to the Provident Fund (PF). Let’s delve into the details to understand whether it is correct to deduct Rs 1,800 as the employer’s contribution.

Basics of Provident Fund Contributions
The Provident Fund is a social security scheme for employees. It ensures savings for retirement. Both the employee and employer contribute to the PF. The contributions are usually a percentage of the employee's basic salary plus dearness allowance (DA).

Contribution Rates
Typically, the employee contributes 12% of the basic salary plus DA to the PF. The employer also contributes 12%, but this is split into two parts: 8.33% goes to the Employee Pension Scheme (EPS) and the remaining 3.67% goes to the Employee Provident Fund (EPF).

Specific Case: Basic Salary Below Rs 15,000
If your basic salary is below Rs 15,000, the employer’s contribution to the PF follows a specific structure:

Employee Contribution: 12% of basic salary + DA
Employer Contribution: 12% of basic salary + DA, split between EPF and EPS
Maximum Limit on Employer’s EPS Contribution
For EPS, the employer’s contribution is capped. The maximum salary considered for EPS contribution is Rs 15,000. Thus, 8.33% of Rs 15,000 (which is Rs 1,250) is contributed to EPS. Any amount above this goes to the EPF.

Calculation Example
Let’s assume your basic salary is Rs 12,000 per month.

Employee Contribution: 12% of Rs 12,000 = Rs 1,440
Employer Contribution:
EPS: 8.33% of Rs 12,000 = Rs 999.60 (capped at Rs 1,250 if basic salary is Rs 15,000)
EPF: 3.67% of Rs 12,000 = Rs 440.40
Scenario: Rs 1,800 Employer Contribution
If the employer is contributing Rs 1,800 when your basic salary is less than Rs 15,000, it’s essential to check the distribution between EPS and EPF. It could mean higher contributions towards EPF, which is allowed.

Is Rs 1,800 Deduction Correct?
The correctness depends on how the Rs 1,800 is split:

EPS Contribution: Should be a maximum of 8.33% of Rs 15,000 or Rs 1,250.
EPF Contribution: The remaining amount after deducting the EPS portion from the total 12% of basic salary.
Empathising with Your Concern
Understanding these deductions can be confusing. It’s important to ensure clarity on how your contributions are calculated. Checking your pay slip and the contribution details can help.

Importance of Accurate Deductions
Accurate PF contributions ensure sufficient retirement savings. It also ensures compliance with legal requirements. Any discrepancies can affect your savings and benefits.

Reviewing Your Payslip
Check Basic Salary: Ensure the basic salary mentioned is accurate.
Review Deductions: Verify the PF deductions.
Seek Clarification: If there are discrepancies, discuss with your HR department.
Benefits of PF Contributions
Tax Savings: Both employee and employer contributions qualify for tax benefits.
Retirement Savings: Ensures a corpus for post-retirement life.
Pension: Part of the contribution goes towards pension, providing regular income after retirement.
Analytical Perspective
From an analytical perspective, understanding the PF structure helps in financial planning. Knowing the exact deductions and contributions clarifies your take-home salary and retirement benefits.

Assessment of Employer Contributions
Regularly assessing employer contributions ensures that they align with statutory requirements. This assessment also helps in identifying any errors early, ensuring corrective measures.

Consulting a Certified Financial Planner
A Certified Financial Planner (CFP) can provide detailed insights into your PF contributions. They can also help you understand the impact on your overall financial planning and retirement savings.

Conclusion
To conclude, if your basic salary is less than Rs 15,000, the employer's contribution should align with the statutory guidelines. Rs 1,800 as an employer contribution can be correct, depending on the split between EPS and EPF. Regular review and consultation with a CFP can ensure accurate contributions and optimal retirement savings.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: To answer it a little in detail will require breakup between dividends, salary and rents please.