Hello All,
I have received a job offer in Mumbai. Since I am not from Mumbai, I will be renting a place. I was advised to structure my salary in such a way that part of it would be House Rent Allowance- this way I could save on taxes by offsetting my actual rent against my House Rent Allowance
I was also told that my HRA exemption would be least of:
1. The actual amount of HRA received.
2. 40 per cent of salary. This increases to 50 per cent if you are renting out the house in Mumbai
3. Rent paid minus 10 per cent of salary (basic component + dearness allowance).
My company is giving me freedom to structure my salary in a way I find tax effective
My questions were as follows:
1. I want to reduce my total of “Basic+DA” component in order to get a higher HRA tax exemption. In that case, can I reduce my "Basic+DA" amount by say 1,00,000 and add that amount under "City Compensatory Allowance"???
2. IF I already have a Dearness Allowance, can I create a City Compensatory Allowance also?
3. For calculation of HRA "Rent paid minus 10 per cent of salary" - SALARY would only consist of Basic+DA, right?? Or is City Compensatory Allowance also counted as salary for HRA calculations???
My confusion is because the definition of DA and CCA is nearly the same, and i do not want CCA to be included in definition of "Salary" for HRA calculation.
PLEASE HELP!!! ALL SUGGESTIONS WOULD BE APPRECIATED
I have received a job offer in Mumbai. Since I am not from Mumbai, I will be renting a place. I was advised to structure my salary in such a way that part of it would be House Rent Allowance- this way I could save on taxes by offsetting my actual rent against my House Rent Allowance
I was also told that my HRA exemption would be least of:
1. The actual amount of HRA received.
2. 40 per cent of salary. This increases to 50 per cent if you are renting out the house in Mumbai
3. Rent paid minus 10 per cent of salary (basic component + dearness allowance).
My company is giving me freedom to structure my salary in a way I find tax effective
My questions were as follows:
1. I want to reduce my total of “Basic+DA” component in order to get a higher HRA tax exemption. In that case, can I reduce my "Basic+DA" amount by say 1,00,000 and add that amount under "City Compensatory Allowance"???
2. IF I already have a Dearness Allowance, can I create a City Compensatory Allowance also?
3. For calculation of HRA "Rent paid minus 10 per cent of salary" - SALARY would only consist of Basic+DA, right?? Or is City Compensatory Allowance also counted as salary for HRA calculations???
My confusion is because the definition of DA and CCA is nearly the same, and i do not want CCA to be included in definition of "Salary" for HRA calculation.
PLEASE HELP!!! ALL SUGGESTIONS WOULD BE APPRECIATED