I referred the some sites for HRA(tax saving) calculation but i couldn't able to find the exact calculation for HRA.
I would like to know the calculation for below example.
Basic 81360 per annum
HRA 24000 per annum
i am paying the rent 84000 per annum and living in metro city.
I am requesting the calculation for above example.
wishing you happy new year .
in cities having population of 4,00,000 and above 20% of basic salary is generally considered to be the HRA
in metro cities like Delhi,Calcutta, Mumbai ,Bangalore, Chennai and Ahemdabad 40 % of basic is taken as HRA component.You may please contact any chartered account who will be in better position.
I hope the above will give you a brief idea.
Thanks & Regards
Labour Law Consultant, Delhi
HRA is min 5% and max 50% exempted for IT.
In metros exemption is max 50% and in non metros its max 40%.
your HRA per month is 2000.
Your rent per month is 7000.
In metros 50% HRA of basic is exempted. In your case 50% of basic is 3390.
the HRA is decided on below mentioned 3 parameters which ever is the least.
1) 50% of basic which is 3390
2) HRA alloted by your company which is 2000
3) monthly rent minus 10% of basic i.e. 7000-678= 6322.
whithin above 3 parameters your actual HRA alloted by your company is the least and so 2000 rupees will be exempted from IT monthly from your salary.
As per section 10(13A) of Income Tax Act the exemption of HRA is to be calculated based on the following:
Least of the following will exempt from Tax:
1) Actual HRA Received,
2) Rent Paid over 10% of salary,
3) 50%/40% of Salary.
For this purpose salary means Basic+DA.
Calculation for the figures given by you will be following:
1) Actual HRA Received: Rs. 24000 per month,
2) Rent Paid over 10% of Salary: Rs. 84000-(10% of 81360), i.e 84000-8136=75864
3) 50% of Salary: 50% of Rs. 81360, i.e 40680/-.
The least of above 3 is Rs. 24000, hence the whole HRA you are getting will be exempt from Tax.
For detailed you may refer to the Income Tax website and serach for section 10(13A).
Hope this will be fine with you.
Health Reimbursement Accounts or Health Reimbursement Arrangements (HRAs) are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to set aside funds to reimburse medical expenses paid by participating employees.
Using an HRA yields "tax advantages to offset health care costs" for both employees as well as employers.
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As you mentioned "deduction under chapter via" it should read as Deductions under chapter VI A.
In income tax act different sections are arranged in different chapters. Likewise this Chapter VI A talks about the deductions available/allowable to an assessee under sections 80A to 80U. The most commonly used section 80C is also under the same chapter.
Another thing EC & Secondary & Higher Edu Cess. The first one stands for Education Cess and that for other Higher Education Cess. These both is to be mandatorily levied upon tax payable computed on the net income of an assessee. The rates are 2% & 1% respectively on tax payable.
Hope this clarifies.
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