Struggling with HRA Calculation for TDS? Need Help with Excel Format for FY 2010-11?

Hi,

Can someone help me with how to calculate HRA for TDS and also send me the current FY 2010-11 TDS calculation working in Excel format.

Please accept my advance thanks.

Srinivasan

Dear Srinivasan,

I will try to explain briefly regarding your query.

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

1) Actual HRA Received

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

3) Actual Rent Paid - 10% of Basic Salary

Among all, whichever is less should be considered for HRA exemption.

Regarding TDS (Tax Deducted at Source), it refers to tax deductions from employees or from rent, consultants, contractors, etc.

To deduct tax from an employee, we need to first compute their total income in a specially designed format for calculating the employee's tax liability for the particular financial year. I have attached the same for calculating the employee's tax liability.

For TDS on Consultants, Contractors, and Rent, there are specified percentages provided by the Income Tax Department. We need to deduct these percentages before making payments.

Current Rates are as follows:

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

I hope this clarifies your query.

Regards,
Sravan

Dear Srinivasan,

I do agree with the explanation given by Mr. Sravan except for 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 comparatively 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, tuition fee for 2 children, etc., altogether subject to ceiling Rs. 100,000.

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

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

The details can be obtained from the following website:

CENTRAL GOVERNMENT EMPLOYEES NEWS: New Income Tax Slab for FY 2010-11

Now, taxable income can be calculated as follows:

Gross salary - total deductions = Taxable income

Taxpayers can be categorized into 3 groups:

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% up to Rs. 5,00,000, 20% thereafter up to 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 an 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 the next 340000 (500000-160000), 340000x10% = 34000 -(1)

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

For the 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 the green color column. Results will be shown in the yellow color. The red color is used for static data.

ABBAS.P.S,

Secretary,

ITI Employees' Association,

ITI Ltd, PALAKKAD - 678 623,

KERALA, INDIA.

Ph. +91 9447 467 667

Let me pose another question: How is TDS calculated for visiting faculty in management colleges who take a fixed number of classes (generally 33)?

Thanks,
Vinni Gill