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In continuation of a 'series of articles' focusing on important amendments backed by likely 'Brainstorming Practical', we are going to learn amendments / changes relating to income chargeable head 'Salary'.

1. Standard Deduction [Section 16(ia)] - Inserted by Finance Act, 2018, w.e.f. A.Y.2019-20

As per this amendment, salaried person can claim standard deduction of Rs.40,000 or the amount of the salary, whichever is less w.e.f. A.Y. 2019-20.

2. Transport allowance – Effective from A.Y. 2019-20

As per amended rules, exemption from transport allowance shall be made available to blind/ handicapped employees only i.e. Rs. 3,200 p.m. and not to other employees.

3. Medical Reimbursement: [Section 17(2)] – Omission of clause (v) of Section 17(2)(viii) w.e.f. A.Y. 2019-20

As a result of omission, benefit of exemption pertaining to reimbursement of medical expenditure incurred by the employee on his medical treatment or treatment of any member of his family (upto Rs. 15,000) in a private hospital shall not be available with effect from A.Y. 2019-20.

Brainstorming Practical

Mr. Krishna is a chartered accountant and employed by Dwarika Ltd. He is paid Rs.2,50,000 per month as salary and bonus equivalent to one month pay. Besides, Dwarika Ltd. provides the following-

  1. Transport allowance: Rs. 1,600 per month.
  2. Entertainment allowance: Rs. 4,000 p.a.
  3. Medical facility in a hospital owned by Dwarika Ltd. Cost to the company for providing this facility to Mr. Krishna was Rs. Rs.51,000.
  4. Medical facility in private hospital costing Rs.22,500 (this private hospital is approved by the Central Government for the medical treatment of its employees).
  5. Medical facility in a hospital approved by the Chief Commissioner: Rs.5,000.
  6. Medi-claim insurance premium paid by Dwarika Ltd. for Mr. Krishna and his family: Rs.15,000.
  7. Reimbursement of other medical expenditure: 15,000.
  8. Professional tax paid by employer: Rs.2,000

Determine the income from Salary. (6 Marks)

Be ready with your answer. I will post the correct answer in next article.

Link of other articles on 'Direct Tax Amendments for May 2019 Students'.

Direct Tax Amendments for May 2019 Examinations: How to prepare?

To enrol Direct Tax Amendment, Finance Act 2018 (CA Final) subject of the author: Click here 
To enrol Direct Tax Amendment, Finance Act 2018 (CA Final New) subject of the author: 
Click here


Published by

CA Mehul Thakker
(Managing Partner)
Category Students   Report

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