17/12/2012

How to calculate HRA for Income tax rebate?

As per Income Tax department circular No. 8/2012 dated 5 Oct 2012 the HRA calculation which is illustrated in that as under

S.No.
Particulars
Rupees
1
Salary
2,50,000
2
Dearness Allowance
1,00,000
3
House Rent Allowance
1,40,000
4
House rent paid
1,44,000
5
General Provident Fund
36,000
6
Life Insurance Premium
4,000
7
Subscription to Unit-Linked Insurance Plan
50,000



Computation of total income and tax payable thereon
S.No.
Particulars
Rupees
1
Salary + Dearness Allowance + House Rent Allowance 2,50,000+1,00,000+1,40,000 = 4,90,000
4,90,000
2
Total Salary Income
4,90,000
3
Less: House Rent allowance exempt U/s 10(13A):
Least of:
(a)  Actual amount of HRA received= 1,40,000
(b) Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-35,000) = 1,09,000
(c) 50% of Salary(Basic+ DA) = 1,75,000
1,09,000

Gross Total Income
3,81,000


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