Hello, what should be an efficient salary breakup for CTC amounting to ₹26,96,088, considering the company provides only Basic, HRA, and special allowances (only these 3)? How can it be tax-efficient for HRA, since special allowance is fully taxable? Please consider the rent paid for the metro city. The focus here is on saving taxes.
From India, Mumbai
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From India, Mumbai
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HRA Tax Exemption Criteria
By whatever adjustment you make, the exception for HRA is based on the three elements like:
1. Actual House Rent Allowance received by the employee.
2. Excess of rent paid for the accommodation occupied by him over 10% of the salary.
3. 50% of salary where the residential house is situated at Mumbai, Calcutta, Delhi, or Chennai, and 40% of the salary where the house is situated at any other place, whichever is LESS.
If you put 50% of the salary as HRA but you are paying only 10% as house rent, then that amount would qualify for tax exemption, right?
From India, Kannur
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4526By whatever adjustment you make, the exception for HRA is based on the three elements like:
1. Actual House Rent Allowance received by the employee.
2. Excess of rent paid for the accommodation occupied by him over 10% of the salary.
3. 50% of salary where the residential house is situated at Mumbai, Calcutta, Delhi, or Chennai, and 40% of the salary where the house is situated at any other place, whichever is LESS.
If you put 50% of the salary as HRA but you are paying only 10% as house rent, then that amount would qualify for tax exemption, right?
From India, Kannur
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Hi Dashang, I can provide some general guidance on salary breakup, but it's important to consult with a tax professional or financial advisor for personalized advice tailored to your specific situation.
For a CTC of ₹26,96,088, an efficient salary breakup could be as follows:
Basic Salary: 40% of CTC (₹10,78,435)
House Rent Allowance (HRA): As per the prescribed limits under the Income Tax Act
Special Allowance: The remaining amount after allocating for Basic and HRA
To make the HRA tax-efficient, you can consider the following steps:
Ensure that the HRA component is structured to reflect the actual rent paid for accommodation in a metro city.
Submit rent receipts to your employer to claim HRA exemption.
If the rent paid exceeds 10% of the basic salary, the HRA exemption can be calculated as per the prescribed rules to maximize tax savings.
It's important to note that tax laws and regulations are subject to change, and individual circumstances can vary. Therefore, it's advisable to seek professional advice to optimize tax efficiency and ensure compliance with relevant laws and regulations.
For personalized tax planning and salary structuring, consulting with a tax advisor or financial planner would be beneficial.
Thanks
From India, Bangalore
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For a CTC of ₹26,96,088, an efficient salary breakup could be as follows:
Basic Salary: 40% of CTC (₹10,78,435)
House Rent Allowance (HRA): As per the prescribed limits under the Income Tax Act
Special Allowance: The remaining amount after allocating for Basic and HRA
To make the HRA tax-efficient, you can consider the following steps:
Ensure that the HRA component is structured to reflect the actual rent paid for accommodation in a metro city.
Submit rent receipts to your employer to claim HRA exemption.
If the rent paid exceeds 10% of the basic salary, the HRA exemption can be calculated as per the prescribed rules to maximize tax savings.
It's important to note that tax laws and regulations are subject to change, and individual circumstances can vary. Therefore, it's advisable to seek professional advice to optimize tax efficiency and ensure compliance with relevant laws and regulations.
For personalized tax planning and salary structuring, consulting with a tax advisor or financial planner would be beneficial.
Thanks
From India, Bangalore
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1. FLOW CHART OF SALARY STRUCTURING AND GRADATION.xls
SALARY CALCULATOR & INCOME TAX.zip