Salary - Doubt ??

Kindly suggest,

 

What is the concept behind taking different meaning for different type of allowances and perquisites for eg. for HRA, Gratuity, Pensions etc etc - we consider only Basic salary + DA (for Ret. ben.) + Commission. (Fixed %) and for Rent free accommodation we take Basic salary + Bonus + All allowances + commission + monetary payment while for Entertainment allowance we take only Basic salary.

 

Can any one please tell me, is there any concept behind such valuation ?? 

Replies (5)

Krishna, well your question is very intersting and very practical, Me too think as like you But ye sirf kitabi gyan hai, there is not any concept. The only thing is that you should have an idea about them for examination purpose.

It is a rule in Income Tax to give valuation of salary earned in gross and  allowances Received (or given against). It also helps to avail advantage of useful sections applicable in getting tax exempt (deductions as well)

very nice quation

as far as i know.....entertainment allowance is fully taxable....for rfa we take taxable allowances nd not all f dem...m i rite?

Yes, You are right, we take only taxable allowances but my question was, why we take all taxable allowances for Rent Free Accommodation while in the case of other valuation like Gratuity, Pension, HRA etc etc. we take only Dearness allowances (for retirement benefit)  besides Basic pay and Commission.

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