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
From India, Madras
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1From India, Madras
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Dear Srinivasan, I will try to explain briefly regarding your query.
Steps to Calculate HRA (House Rent Allowance)
To calculate HRA, the following steps are to be considered:
1. Actual HRA Received
2. 40% of basic salary (in case of a Metropolitan city, 50% for Delhi, Mumbai, Calcutta, Chennai)
3. Actual Rent Paid - 10% of Basic Salary
Among all, whichever is less should be considered for HRA exemption.
Understanding TDS (Tax Deducted at Source)
TDS 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
From India, Hyderabad
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Steps to Calculate HRA (House Rent Allowance)
To calculate HRA, the following steps are to be considered:
1. Actual HRA Received
2. 40% of basic salary (in case of a Metropolitan city, 50% for Delhi, Mumbai, Calcutta, Chennai)
3. Actual Rent Paid - 10% of Basic Salary
Among all, whichever is less should be considered for HRA exemption.
Understanding TDS (Tax Deducted at Source)
TDS 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
From India, Hyderabad
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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
From India, Delhi
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From India, Delhi
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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.
Deductions on Gross Salary
On gross salary, the following deductions are applicable:
• Professional Tax
• House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
• Interest on Housing loan subject to ceiling Rs. 1,50,000
• Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to ceiling Rs. 100,000
• In addition, savings on infrastructure bonds up to Rs. 20,000
• Other than the above one lakh, 15,000 to 20,000 towards mediclaim premium, 40,000 to 60,000 towards treatment of specified diseases like Motor Neuron disease, 75,000 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
Calculating Taxable Income
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Taxpayer Categories
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.
Example Calculation
I shall quote an example:
Gross income of a Non-Senior Male - Rs. 12,00,000
Deductions (actual): Professional Tax - 12,000, 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) - 12,000 + 1,50,000 + 1,00,000 + 20,000 + 50,000 = 3,32,000
Taxable income, 12,00,000 - 3,32,000 = 8,68,000
For Non-Senior Male:
Rs. 1,60,000 is exempted.
For the next 3,40,000 (5,00,000-1,60,000), 3,40,000x10% = 34,000 -(1)
For the next 3,00,000 (8,00,000-5,00,000), 3,00,000x20% = 60,000 -(2)
For the next 68,000 (8,68,000-8,00,000), 68,000x30% = 20,400 -(3)
Tax - (1) + (2) + (3) = 1,14,400
Also, For Non-Senior Female Tax is 1,14,400 - 3,000 = 1,10,400
and Senior Citizens Tax is 1,14,400 - 8,000 = 1,06,400
Education Cess, 1,14,400*3% = 3,432.
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.
Regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. [Phone Number Removed For Privacy Reasons]
From India, Bangalore
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Deductions on Gross Salary
On gross salary, the following deductions are applicable:
• Professional Tax
• House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
• Interest on Housing loan subject to ceiling Rs. 1,50,000
• Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to ceiling Rs. 100,000
• In addition, savings on infrastructure bonds up to Rs. 20,000
• Other than the above one lakh, 15,000 to 20,000 towards mediclaim premium, 40,000 to 60,000 towards treatment of specified diseases like Motor Neuron disease, 75,000 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
Calculating Taxable Income
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Taxpayer Categories
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.
Example Calculation
I shall quote an example:
Gross income of a Non-Senior Male - Rs. 12,00,000
Deductions (actual): Professional Tax - 12,000, 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) - 12,000 + 1,50,000 + 1,00,000 + 20,000 + 50,000 = 3,32,000
Taxable income, 12,00,000 - 3,32,000 = 8,68,000
For Non-Senior Male:
Rs. 1,60,000 is exempted.
For the next 3,40,000 (5,00,000-1,60,000), 3,40,000x10% = 34,000 -(1)
For the next 3,00,000 (8,00,000-5,00,000), 3,00,000x20% = 60,000 -(2)
For the next 68,000 (8,68,000-8,00,000), 68,000x30% = 20,400 -(3)
Tax - (1) + (2) + (3) = 1,14,400
Also, For Non-Senior Female Tax is 1,14,400 - 3,000 = 1,10,400
and Senior Citizens Tax is 1,14,400 - 8,000 = 1,06,400
Education Cess, 1,14,400*3% = 3,432.
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.
Regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. [Phone Number Removed For Privacy Reasons]
From India, Bangalore
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Income Tax Calculation 2009-10 - Salaries.xls