How to fill salary details in ITR1 for FY 2017-18

By 

Preeti Motiani

Income tax return (ITR) form 1 for FY 2017-18 requires taxpayers to provide full details of their salary income and income from house property. Individuals who were earlier asked to provide only the taxable amount of salary will now be required to provide break-up of their salary such as allowances not taxable, perquisites etc. 

Before you start calculating the amount of salary income that is taxable, there are certain documents you must keep in handy. (Click here to find out more about how to prepare for filing of ITR and how to e-file your ITR using the income tax website.) 

Salary is made up of various components such as: 
a) Basic salary, 
b) House rent allowance (HRA), 
c) Special allowance , 
d) Other allowances, reimbursements etc. 

However, not all of the amount received as salary is fully taxable. A part of it will be fully  exempt from tax and a part of it will be partially exempt. Hence, you must have all the required documents in order to ascertain the amount which is chargeable to tax from salary. These income details will be filled by you under the third-tab of the form 'Income details'. 

Chartered accountants recommend that before you start filing your ITR on the e-filing website of the tax department, it is advisable that you compute your taxable income on the piece of paper or in an Excel file. This helps to avoid wasting time while you are filing your returns as tax department login remains active for only 15 minutes. You can save the general information filled by you as a draft on the e-filing website and log out when have to compute the income chargeable to tax or do this before you start filing your return completely online. 

There are five rows to be filled with regards to salary income: 
a) Salary (excluding all allowances, perquisites and profit in lieu of salary), 
b) Allowances not exempt, 
c) Value of perquisites, 
d) Profits in lieu of salary and 
e) Deductions u/s 16. 

All the information required to fill the salary details are available in Form-16 given to you by your emp loyer as well as in your salary slips. Here's how to get that information from Form-16 and salary slips and fill in ITR-1. 

Form-16

Form-16 consists of two parts, A and B. Part A of the form consists of information such as name and address of the employer, TAN and PAN of your employer, PAN of the employee and summary of tax deducted and deposited quarterly. Part-B of the form consists of break-up of total income from salary, deductions that you can claim to reduce your total income chargeable to salary. 

If you have changed your job in the last financial year, i.e., in 2017-18, ensure that you have received Form-16 from your previous employer as well or you have salary slips from the previous employer. 

Click here to know how to deal with Form-16 if you have switched jobs. 

TDS deducted from your salary during the FY 2017-18 from your current or ex-employer should also be deposited with the tax department against your PAN. This can be checked by downloading Form 26AS. 

Here, one must remember that TDS deducted from your salary should reflect in Form-26AS as well, otherwise you will not be able claim tax-credit for that deduction. 

Click here to know why TDS certificates should match with Form-26AS. 

How to compute the taxable income part of your salary 
As mentioned above, not all the components of your in-hand salary are fully taxable. Let us take a look at where you can get the required figures from Form-16 and salary slips. 

Salary excluding allowances, perquisites and profit in lieu of salary

The first row under the head 'Salary' requires you to provide the salary which is excluding of all allowances, perquisites and profit in lieu of salary. 
Naveen Wadhwa, DGM, Taxmann.com says, "Amount of salary reported in point no. (a) of gross salary in Part-B of Form 16 is inclusive of basic and all the allowances received during the year. This amount also includes allowances that are partially or fully exempt from tax. Therefore, if your employer does not provide you the break-up of your annual income in the Form-16 Part-B, then you will be required to calculate this taxable figure from the salary slips." 

This 'salary' amount will include basic salary or wages, any annuity or pension, gratuity, advance salary, leave encashment, fees, commissions, explains Wadhwa. Therefore, you will be required to add each of the above mentioned amounts to arrive at this figure. 

Allowances not tax-exempt

The second cell asks the information about allowances not exempt from tax. You will be required to calculate this amount because Part-B of Form-16 provides amount that are exempt from tax. 

You can find these allowances paid to you in the salary slips of the FY2017-18. You will be required to add up each allowance received every month from the corresponding pay-slip to calculate the annual amount received by you. 

Taxation of each allowance received by you is different. It can be fully or partially taxable in your hands. For instance, amount of house rent allowance (HRA) that will be exempt from tax will be calculated based on certain conditions. However, if you are living in your own house or not paying any rent, then the whole amount will be taxable. 

Click here to use our HRA calculator to compute the tax-exempt amount. 

On the other hand, if your salary structure has special allowance, then the whole amount will be chargeable to tax. You will also be required to report the allowances exempt from tax as mentioned in point 2 of Form-16 Part-B in the tab 'Taxes Paid and Verification'. For FY 2017-18, transport allowance up to Rs 19,200 in a year is exempt from tax. However, from FY 2018-19 onwards, this allowance will be fully taxable in your hands. 

Click here to know all the tax-exemption limits for allowances, reimbursements that are applicable for salaried employees

Valuation of perquisites

Apart from basic salary, if there are benefits offered to you from your employer such as rent-free accommodation, motor car for official as well as personal use, sweat equity shares, employees' stock option plans (ESOPs) etc. then these will be chargeable as perquisites in your hands. 

Wadhwa says, "The amount of perquisites chargeable to tax is calculated on the basis of the rules pertaining to it. There are different rules to 

to calculate amount chargeable to tax for rent-free accommodation and motor car. The amount on which you are liable to pay tax on the perquisites offered to you will be calculated by your employer and mentioned in your Form-16. In the part-B of the Form-16, under the head gross salary, value of perquisites mentioned is the total amount that will be chargeable to tax." 

Please note that the medical reimbursement received by you is a perquisite not an  allowance. For the FY 2017-18, medical reimbursement received up to Rs 15,000 is exempt from tax on the submission of actual bills to the employer. Any amount received over and above Rs 15,000 will be added to the perquisite section. 

From FY 2018-19 onwards, i.e., from next year onwards, no deduction shall be allowed for medical reimbursement and transport allowance in lieu of these exemptions, an employee shall be entitled to claim a standard deduction of Rs. 40,000. 

Profits in lieu of salary

Any payment received or due in addition to the wages or salary from your employer are termed as 'Profit in lieu of salary'. Section 17(3) includes amount due or received as 
a) Voluntary retirement amount 
b) Retrenchment compensation 
c) Employer's contribution to provident fund in excess of 12 percent of salary 
d) Interest received from a recognised provident fund in excess of 9.5 percent in a year 
e) Any payment received from employer before joining (joining bonus) or after cessation from employment 

The amount of money received as 'Profit in lieu of salary' depends on the type of compensation received by you. Wadhwa says, "If money is received as voluntary retirement or retrenchment benefit, then the amount received up to Rs 5 lakh is exempt from the tax. On the other hand, amount received as joining bonus will be fully taxable in individual's hands." 

This taxable amount is also available in Part-B of Form-16 under the head 'Profits in lieu of salary under section 17(3).' Wadhwa adds, "The amount mentioned in Form-16 is the total amount on which you are liable to pay tax." 

Deductions under section 16

There are certain deductions that are allowed from gross salary income. You can claim these deductions only if you have salary income. As per the current laws, you can claim these two deductions from

the salary income: 
a) Entertainment allowance 
b) Tax on employment 

Deduction on the entertainment allowance is available only to government employees. The amount of deduction available on entertainment allowance is the least of the following: 
a) Rs 5,000 
b) 1/5th of salary (excluding any allowance, perquisite) 
c) Actual amount received. 

If you have paid any employment tax or professional tax to the state government, then you can claim the deductions for them  as well. 

The amount of deduction available is mentioned in the part-b of the Form-16 under the head 'Deductions'. 

After computing the amount that will be taxable under the different components of salary, you have got the amount that will be chargeable under the head of salary. These amounts can be entered by you in the ITR-1 on the e-filing website against the corresponding cells under the head income from salaries in the Income Details tab. 

If you have one house property, you will be required to provide the amount which is chargeable to tax. 

Click here to know how to calculate income from house property. 

If you do not own any house property, then you can simply skip this calculation and scroll down to the income from other sources. 

Click here to know how to fill income from other sources