HRA

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rajesh (Querist)

17 February 2011 Whether HRA should be some % of basic salary? or is there any rule that HRA should be in proportion to basic salary? This is not with reference to calculating HRA exemption, but it is for deciding salary structure of an employee.

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

17 February 2011 HRA is an allowance and is given to the employee for meeting his cost towards rental accommodation.
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Salary structure of an employee may be designed, so that he may get maximum benefit of HRA.
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HRA in excess of 40%/50% of (Basic Salary+DA in terms of employment+Commission on Turnover Basis)
will always be taxable in case of Non Metro/ Metro cities respectively, so it should not be higher than such percentage

CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)

17 February 2011 Hi,
There is no rule that HRA should be some % of Basic salary.

In Simple terms the purpose of Providing HRA is to help reduce the burden of Employee paying up the rent.

Further an indirect effort to claim the benefit as an expenditure of Rent while assessing Salary Income.

Hope i answered the Issue

For further clarificqation Pls Join my Community "Lo Aca"

Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons

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