As per the Income Tax Act, while computing the Taxable Income the following are deducted from the Gross Salary for the Employees.
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Exemptions: As per section 10, there are certain Allowances which are Exempted from Income Tax such as HRA, LTA, Transport Allowance, Children Education Allowance and Children Hostel Expenditure Allowance.
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Deductions Under Chapter VI-A: As per Chapter VI-A of Income Tax, the following Deductions are allowed while computing the Taxable Income:
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Investments (U/s 80C, 80CCF, 80CCG, etc.): Under section 80C, 80CCF, 80CCG, etc. certain investments are allowed as deduction (based on a ceiling) for the computation of Taxable Income.
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Others (U/s 80D, 80DD, 80E, etc.): Under section 80D, 80DD, 80E etc., certain other Expenses are also deducted before arriving at taxable amount. such as Mediclaim, Interest paid on higher education loan etc.
The Employee can provide the Exemption and Deduction details to the Employer and these details can be entered in the system as Employee Declaration by following the process given below:
Go to Gateway of Tally > Payroll Info. > Income Tax Details > Declarations
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You can select the required Exemption and Investments and enter the Employee Declarations details.
Declaring House Rent Allowance
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Select the required Employees or All Employees or an Employee Group
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In House Rent Declaration screen,
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Specify the date from which the Rent is paid in the Effective From field
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In Rent Declared Amount field, specify the amount which is declared by Employee as Rent
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In Rent Proof Amount field, specify the amount for which the rent proof has been provided by the Employee
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In Place of Residence, select Metro or Non-Metro based on the City
Note: Metro should be selected for Delhi, Mumbai, Kolkata and Chennai. For all others cities, Non-Metro should be selected.
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Similarly, the HRA details for single Employees can also entered.
Leave Travel Assistance
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From Income Tax Declaration screen, bring cursor on Leave Travel Assistance and press Enter or press Alt+L
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Select the required Employee
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In the Leave Travel Assistance screen,
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Specify the date from which the LTA is applicable in the Effective From field
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In Ledger Name field select the Leave Travel Assistance ledger
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In Override for field Exempt will be defaulted and Tally.ERP 9 skips the field
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In Exemption Amount field, specify the amount for which the LTA is exempted from Income Tax.
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Declaring Transport Allowance
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From Income Tax Declaration screen, bring cursor on Transport Allowance and press Enter or press Alt+A
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Select the required Employees or All Employees or an Employee Group
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In the Transport Allowance screen,
Note: Employee Status will be used for Transport Allowance exemption limit.
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Declaring Children Education Allowance
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From Income Tax Declaration screen, bring cursor on Children Education Allowance and press Enter or press Alt+C
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Select the required Employees or All Employees or an Employee Group
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In the Children Education Allowance screen,
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Specify the date from which the Children Education Allowance is applicable in the Effective From field
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In Number of Children, enter the total children for each employee ( allowed for a maximum of two)
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Declaring Children Hostel Expenditure Allowance
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From Income Tax Declaration screen, bring cursor on Children Hostel Expenditure Allowance and press Enter or press Alt+X
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Select the required Employees or All Employees or an Employee Group
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In the Children Hostel Expenditure Allowance screen,
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Specify the date from which the Children Hostel Expenditure Allowance is applicable in the Effective From field
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In Number of Children, enter the total children for each employee (allowed for a maximum of two)
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Income Declared by Employee - Single Employee Multi Component
Under this head, you can define employee(s) declarations & proofs/eligible amount for the other incomes like House Property, other sources & Interest on housing Loan if self occupied.
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Similarly, you can select the applicable other Income.
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Income Declared by Employee - Multi Employees Single Component
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Specify the Effective From date
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In Annual Amount column specify the Declare & Proof Amount. Based on the Amount entered in Declare & Proof columns, Qualifying Amount will be displayed.
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Declaring Investments U/s 80C, 80CCF, 80CCG, etc. - Single Employee Multi Component
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From Income Tax Declaration screen, bring cursor on Single Employee Multi Component under Investments (U/s 80C, 80CCF etc.) and pressEnter or press Alt+M
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Select the required Employee from the List of Employees and press Enter
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In the Investment Declaration screen,
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Under Particulars of Investments, select the required Investments from the List of Investments
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Specify the date from which these Investments are applicable in the Effective From field
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In Declared Amount field, specify the amount Declared for the respective Investment
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In Proof/Eligible Amount field, specify the details of the amount for which proof is submitted by the Employee
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Declaring Investments U/s 80C, 80CCF, 80CCG, etc. - Multi Employees Single Component
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From Income Tax Declaration screen, bring cursor on Multi Employees Single Component under Investments (U/s 80C, 80CCF etc.) and pressEnter or press Alt+S
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Select the All Items from the List of Employees and press Enter
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Select the required Investment from the List of Investments press Enter
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In the Investment Declaration screen,
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Specify the date from which these Investments are applicable in the Effective From field
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In Declared Amount field, specify the amount Declared for the selected Investment
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In Proof/Eligible Amount field, specify the details of the amount for which proof is submitted by the Employees
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From Income Tax Declaration screen, bring cursor on Single Employee Multi Component under Others (U/s 80D, 80DD, 80E etc.) and pressEnter or press Alt+T
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Select the required Employee from the List of Employees and press Enter
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In the Chapter VIA Others Declaration screen,
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Under Particulars of Deduction, select the required Deduction from the List of Investments
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Specify the date from which these Deductions are applicable, in the Effective From field
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In Condition field, select respective parameter from the List (such as Others, Senior Citizen or Severe Disability) based on the information provided
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In Declared Amount field, specify the amount Declared for the respective Investment
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In Proof/Eligible Amount field, specify the details of the amount for which proof is submitted by the Employee
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Qualifying Amount field displays the actual Amount which is allowed as Deduction from Taxable salary
Note: In case of Mediclaim Insurance taken for the dependant parents in addition to self, the maximum Qualifying Amount is Rs. 40,000 [Self(if Senior Citizen) Rs.20000 + Parents (Senior Citizens) Rs. 20000).
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Declaring Other Deduction under Chapter VI-A - Multi Employees Single Component
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From Income Tax Declaration screen, bring cursor on Multi Employees Single Component under Others (U/s 80D, 80DD, 80E etc.) and pressEnter or press Alt+O
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Select the All Items from the List of Employees and press Enter
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Select the required Investment from the List of Investments press Enter
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Specify the date from which these Investments are applicable in the Effective From field
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In Condition field, select respective parameter from the List (such as Others, Senior Citizen or Severe Disability) based on the information provided
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In Declared Amount field, specify the amount Declared for the selected Investment
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In Proof/Eligible Amount field, specify the details of the amount for which proof is submitted by the Employees
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