How Do I Calculate Salary Components Like HRA and DA for Our Employees?

Hi, Sir, Previously, our company was a proprietorship company, but now it has been converted to a private company. Now, I have to calculate and give salaries by manually computing the basic salary, HRA, and DA. Please suggest how to calculate these components and how much tax should be deducted from the salary. Also, provide information on the salary ranges that are exempt from tax deduction.

Our employees are receiving 8000 as their pay for the month, and I need to calculate the HRA and DA for this amount. Please help me with the calculation.

Thank you.

You can calculate the salary by using the following pay calculator attached for your reference.

India Income Tax Slabs 2012-2013

General Tax Payers
- Income Tax Slab (in Rs.)
- 0 to 2,00,000: No tax
- 2,00,001 to 5,00,000: 10%
- 5,00,001 to 10,00,000: 20%
- Above 10,00,000: 30%

Female Tax Payers
- Income Tax Slab (in Rs.)
- 0 to 2,00,000: No tax
- 2,00,001 to 5,00,000: 10%
- 5,00,001 to 10,00,000: 20%
- Above 10,00,000: 30%

Senior Citizens (Aged 60 years but less than 80 years)
- Income Tax Slab (in Rs.)
- 0 to 2,50,000: No tax
- 2,50,001 to 5,00,000: 10%
- 5,00,001 to 10,00,000: 20%
- Above 10,00,000: 30%

Very Senior Citizens (Aged 80 and above)
- Income Tax Slab (in Rs.)
- 0 to 5,00,000: No tax
- 5,00,001 to 10,00,000: 20%
- Above 10,00,000: 30%

Please find enclosed the Income Tax Calculator. CiteHR Attribution: Income Tax Declaration and Salary Calculator.

Regards

Thank you, madam, for your reply. I wanted to know if the employee is getting 5,000 or less than that, can we perform a tax deduction? If people are having more than 30,000 as salary, how much percent do we have to deduct? I have heard that for salaries exceeding 80,000, we must perform tax deductions.

Hi Bharathi, For a salary of Rs. 5000/-, you can't break it down as Wages & HRA. If you do so, the Basic & DA will be less than the minimum wages. Please note, Basic + DA should not be less than the minimum wages.

Even for Rs. 22,000/-, you can make a rough breakup with no TDS. Once your gross salary reaches a certain level, you should plan well for TDS as there are chances for tax applicability. You can't straight away deduct tax; there are many calculations involved in TDS.

As Ms. Sharmila suggested, you should consider the TDS brackets and take into account HRA exemption, and allowances like Conveyance, Medical, Food Coupons, Savings, etc.