Rearding HRA allowance

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Bharadwaj (Querist)

29 March 2009 I have a question regarding HRA computation

HRA is the least of the following

1.40 or 50% of the salary ( in case of metro & non-metro )
2.actual hra recd
3.Excess of rent paid over 10% of salary

In the following what does salary represent either salary or basic salary

while salary includes DA, commission
and basic salary does not include so

so what shall we take for the computation either salary or basic salary

Ram Avtar Singh

Ram Avtar Singh (Expert)

29 March 2009 Salary Income

Salary normally includes wages, annuity, pension, gratuity, commission, perquisites, etc. and any other payment received by an employee from the employer received during the year.

Allowances

Most allowances are taxable like City Compensatory allowance, tiffin allowance, fixed medical allowance and servant allowances; encashment of any concession is also taxable.

A) House Rent Allowance

Out of house rent allowance received during the year, least of the following three amounts will not be included in income: -

The amount equal to 50% of annual salary, for persons staying in Mumbai, Chennai, Calcutta or Delhi, but 40%, for others
The actual amount of house rent allowance received
The amount of rent actually paid in excess of 10% of annual salary
Here, salary includes basic salary, dearness allowance, and commission on fixed percentage, but not other allowances.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

29 March 2009 Salary for HRA=
1.Basic
2.DA (Which forms part of retirement benefits).
3.Commission(On fixed percentage of turnover).

Bharadwaj

Bharadwaj (Querist)

29 March 2009 ya thanks

means salary represents all incomes which can be included under salaries ( like DA, commission ....etc; )

so while calculating the 1st pt and even the 3rd pt we have to take salary not the basic salary

Thanks for the communication.

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