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Hi, Can someone help me how to calculate HRA for TDS and also send me the current FY2010-11 TDS calculation working in xcl format. Please Advance Thanks Srinivasan
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Dear Srinivasan,

I will try to explain in brief for your query.

To calculate HRA ( House Rent Allowance ) following steps are to be considered

1) Actual HRA Received

2) 40% of basic ( in case of Metropolitan city 50% (Delhi, Mumbai, Calcutta, Chennai)

5) Actual Rent Paid -10% of Basic Salary

In among all which ever is less to be considered for HRA exemption.

About TDS (Tax Deducted at Source) it is nothing but tax deduction from employee or from Rent, Consultants, contractors etc..

To deduct tax from employee foremost we have to compute his total income in separate format which is designed specially for calculating of employee tax liability for the particular financial year. I have attached the same for calculating of employee tax liability.

TDS about Consultants, Contracts, Rent there are some specified percentage has given Income Tax Department for doing the same according to that we have to deduct from them before making payment.

Current Rates are as follows

For Consultants (194J): 10%, Contractors (194C): 2%. Rent (194I): 10% for Buildings and for Plant and Machinery 2%.

I hope you are clear now.


Attached Files
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File Type: xls Income Tax Calculator for 2010-11.xls (35.0 KB, 3059 views)

Dear Srinivasan, I do agree with the explanation given by Mr. Sravan except one thing. Step no 1 should be "ACTUAL HRA RECEIVED" in place of Actual rent paid to calculate HRA. Regards, Sanjay Gupta
I shall insert an Excel worksheet (but comparitively simple) for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that I wish to explain some details to get an idea to enter the inputs.

On gross salary the following deductions are applicable.

1) Professional Tax

2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA

3) Interest on Housing loan subject to ceiling Rs. 1,50,000.

4) Refund on Housing loan, savings, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.

5) In addition savings on infrastructure bonds upto Rs. 20,000.

6) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.

The details can be obtained from following web site.


Now taxable income can be calculated as follows.

Gross salary - total deductions = Taxable income

Tax payee can be categorised into 3.

1) Non Seniors - Male

2) Non Seniors - Female

3) Senior Citizens (65 years old & above)

If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non Senior Female has to pay in excess of Rs.1,90,000 & Non Senior Male in excess of Rs.1,60,000.

Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto Rs.8,00,000 and 30% in excess of Rs.8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.

I shall quote on example.

Gross income of a Non Senior Male - Rs. 12,00,000

Deductions (actual) : Professional Tax - 12000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.

Admissible total deductions (subject to ceiling limits) - 12000+150000+100000+20000+50000 = 332000

Taxable income, 1200000 - 332000 = 868000

For Non Senior Male :

Rs. 1,60,000 is exempted.

For next 340000 (500000-160000), 340000x10% = 34000 -(1)

For next 300000 (800000-500000), 300000x20% = 60000 -(2)

For next 68000 (868000-800000), 68000x30%= 20400 -(3)

Tax - (1)+(2)+(3) = 114400

Also For Non Senior Female Tax is, 114400-3000 = 110400

and Senior Citizens Tax is, 114400-8000 = 106400

Education Cess, 114400*3% = 3432.

Total Tax - Rs. 1,17,832

See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.



ITI Employees' Association ,

ITI Ltd, PALAKKAD - 678 623,


Ph. +91 9447 467 667

Attached Files
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File Type: xls Income Tax Calculator.xls (17.0 KB, 1091 views)

Let me pose another question. How is TDS calculated for visiting faculty in management colleges who take a fixed no. of classes (gen. 33). Thanks, Vinni Gill
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