Think You Know Your Salary? Here's What Actually Gets Taxed In ITR Filing 2025

Income Tax (IT) Return Filing Lessons: Filing can feel like navigating a minefield, even for salaried individuals whose income sources often seem straightforward. Yet, every year, countless taxpayers make common errors that can lead to notices, delayed refunds, or even penalties.

Filing your income tax return can be extremely taxing if you aren't aware of the integrities' or succumb to common mistakes that most salaried individuals are known to make every year, this can lead to notices, delayed refunds and unforeseen penalties.

Breakdown Of What A Salary Truly Constitutes-  

Compensation received from employer for the services rendered as an employee. It includes basic salary, allowances, bonuses, commissions, and perquisites (non-cash benefits like rent-free accommodation, and car.

Basic Salary- This part of one's salary is always taxable in full and usually doesn't exceed 40 per cent of total cost of the company.

Dearness Allowance (DA)- This cost-of-living adjustment, a percentage of an individual's salary, is also fully taxable and is revised periodically.

House Rent Allowance (HRA)- This provision by your employer aids in covering your monthly rental expenses, however, it remains partially taxable. However, there is possibility that certain exemptions can reduce the taxable portion of your income.

Leave Travel Allowance (LTA)- It usually falls under the tax-free component of your monthly allowance that your company provides.

Bonus/Commission- They are considered completely taxable according to the Income Tax (IT) Department.

Perquisites- According to the prescribed rules, they are considered to be taxable. The nature of this part of one's salary includes car, and even housing.

Provident Fund (PF)- Employer contribution is taxable by 12 per cent. The most popular types of provident funds being Employee Provident Fund (EPF) and public provident fund (PPF). 

Common Mistakes While Filing Income Tax Return

Not declaring interest income or other minor income 
Forgetting to report income from multiple employers Claiming ineligible deductions
Not verifying Form 26AS and Form 16 mismatch