In addition, the tax exemption under section 80C can be increased from Rs 1.5 lakh to Rs 2 lakh. What will grow and what will not will be known only on the first of February, but before that it is necessary to know what is called taxable income, gross income and net income.
- What is Gross Income?
Gross salary is the amount paid to you by the company. These include Basic Salary, HRA, TA, DA, Special Allowance, Leave Encashment. Gross celery is also called take home celery.
To calculate taxable income, it is necessary to know the gross income. Your gross income is also stated in Form 16 provided by your company.
- What is Net Income?
When you fill in the income tax return form, after filling in some of the starting points, you will come across a column of net salary. It does not need to be filled, it fills itself. Then the question naturally arises that what is net income? In fact, when the allowance like leave travel allowance, house rent allowance, earned leave encashment is deducted from your gross salary, that figure is called net salary.
- What is Taxable Income?
Your savings and deductions on net celery are deducted.
As such, a standard deduction of Rs 50,000 is deducted, and any investment you show under 80C is also deducted. Apart from this, health insurance and life insurance premiums are also deducted. If you have taken a home loan, you can also get a discount of up to Rs 2 lakh on its interest. Thus, under various sections of the Income Tax Act, income tax is levied on the amount of salary after deducting all the amount you claim.
It also does not have to pay any tax on annual income up to Rs 1.5 lakh. Then you have to pay tax on the remaining amount.