Hi,
Can anyone out there help me out to clear my query - " HRA is calculated on how % of the base salary " coz I find varied deductions from 30 to 40 to 50% in various salary slips of companies.
Liritta
From India, Mumbai
1Can anyone out there help me out to clear my query - " HRA is calculated on how % of the base salary " coz I find varied deductions from 30 to 40 to 50% in various salary slips of companies.
Liritta
From India, Mumbai
Hi!!! It’s generally 50% of the basic salary to reduce the tax liability of the employees. The percentage may vary depending on the company’s policies. Regards Himani
Hi Himani,
Thanks you much.
I am still not clear if the companies could have discreation on fixing the HRA coz it is related to the Tax framework as well.
So, I dont think that companies can have the sole discreation in deciding the HRA.
YOUR VALUABLE COMMENTS PLEASE...............
Thanks,
Liritta
From India, Mumbai
Thanks you much.
I am still not clear if the companies could have discreation on fixing the HRA coz it is related to the Tax framework as well.
So, I dont think that companies can have the sole discreation in deciding the HRA.
YOUR VALUABLE COMMENTS PLEASE...............
Thanks,
Liritta
From India, Mumbai
HOUSE RENT ALLOWANCE IS GRANTED TO ENABLE THE EMPLOYEE TO MEET THE COST OF HOUSING REQUIREMENT. AS PER INCOME TAX ACT, 1961 AN AMOUNT EQUAL TO 50 PER CENT OF THE SALARY WHERE THE RESIDENTIAL HOUSE IS SITUATED IN DELHI, KOLKATTA, CHENAI,OR MUMBAI AND 40 PER CENT IN CASE OF OTHER TOWN AND CITIES. HOUSE RENT ALLOWANCE RECEIVED BY THE EMPLOYEE, THE EXCESS OF RENT PAID OVER 10 PER CENT OF SALRY, LEAST OF THE THREE IS EXEMPTED FROM INCOME TAX. SALARY FOR THIS PURPOSE MEANS THE BASIC PAY PLUS DA IF THE TERMS OF EMPLOYMENT SO PROVIDE.
DEEPAK THUKRAL
CHANDIGARH
From India, Chandigarh
DEEPAK THUKRAL
CHANDIGARH
From India, Chandigarh
Hi!!! Liritta
I hope this will clear your doubt.
There are certain rules that are to be taken into consideration to calculate the amount of HRA at the time of calculation of Tax exemption. HRA is a partly taxable allowance if after applying the three rules it is decided whether it is fully exempt from tax or apart of the HRA is to be taxed. The rules are given below.
1. Actual HRA Received that could be any % of the Basic salary
2. Rent paid – 10% of the Salary
3. 50% of the Salary in Metro / 40% in other cities
After applying these rules the amount which is the least among these three rules is exempt from tax. Generally 50% of Basic is decided as HRA so that the employee gets the maximum tax exemption.
Regards
Himani
I hope this will clear your doubt.
There are certain rules that are to be taken into consideration to calculate the amount of HRA at the time of calculation of Tax exemption. HRA is a partly taxable allowance if after applying the three rules it is decided whether it is fully exempt from tax or apart of the HRA is to be taxed. The rules are given below.
1. Actual HRA Received that could be any % of the Basic salary
2. Rent paid – 10% of the Salary
3. 50% of the Salary in Metro / 40% in other cities
After applying these rules the amount which is the least among these three rules is exempt from tax. Generally 50% of Basic is decided as HRA so that the employee gets the maximum tax exemption.
Regards
Himani
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