Taxontips
No Result
View All Result
Monday, September 25, 2023
Login/ Register
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Talk to an Expert
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
No Result
View All Result
Taxontips
No Result
View All Result

House rent allowance (HRA) available even when it is not a part of salary slip? | HRA calculation |Calculation sheet available

Naman Maloo by Naman Maloo
October 11, 2020
in Income Tax News
0
House rent allowance (HRA) available even when it is not a part of salary slip? | HRA calculation |Calculation sheet available
126
SHARES
1.6k
VIEWS
image_pdfPDFimage_printPrint

When it comes to taxation, a salaried employee is the one who pays the most tax because, a salaried employee don’t have much options to plan tax and to save it.

Whenever a person gets a job the first question that he ask is what is his take home salary because he knows that even though his CTC i.e. cost to company might be a big figure but after removing taxes, provident fund etc. he just gets a very small amount to take home.

A salaried employee always complains that compared to a businessman he don’t have much option to save tax or claim expenses even when both of them are earning more or less the same.

Now one of the major options to save tax with a salaried employee are Home loan or House rent allowance (HRA).

In very rare situations an employee is able to take benefit of both. House rent allowance allows the salaried employee to reduce the rent paid from his total salary.

However this is not that simple for income tax purpose as one won’t get straight away deduction of entire rent paid. Income tax department has prescribed a method to calculate your house rent allowance governed by section 10(13A) of the Income tax act which is as under:

“any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.

Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where—

(a) the residential accommodation occupied by the assessee is owned by him ; or

(b) the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him ;“

Thus, from the above section it is clear that one would get HRA benefit only for the house occupied by him because many people have query that rent paid by assessee for a premises rented for his parent would be allowed as HRA. According to the section this won’t be available.

Now let’s have a look at the method prescribed for calculation of such HRA prescribed in “rule 2A” of the Income tax act which is as under:

“The amount which is not to be included in the total income of an assessee in respect of the special allowance referred to in clause (13A) of section 10 shall be

(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or

(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or

(c) an amount equal to—
(i) where such accommodation is situate at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period; and
(ii) where such accommodation is situate at any other place, two-fifth of the amount of salary due to the assessee in respect of the relevant period,

whichever is the least.

(i) “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;

(ii) “relevant period” means the period during which the said accommodation was occupied by the assessee during the previous year.“

Let’s first understand what meaning has been assigned to salary in clause (h) of rule 2 of 4th schedule which is the basis for HRA calculation  and same is as under:

“salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

Thus, from the above definition it is clear that there are three components which should be available with one to calculate HRA relief:

1. Salary as mentioned above.

2. Actual HRA provided in Salary.

3. Actual rent paid.

Let’s take an example to understand the calculation:

Person A stays in Jaipur for job and pays monthly rent of Rs. 12000 and his salary structure is as under:

Basic pay: Rs. 40,000, H.R.A.: Rs. 15,000 and Other allowance Rs. 25,000.

Now as per the method prescribed above the amounts relevant for the calculation are as under (Here salary would be just 40,000 as there is no dearness allowance):

1. Actual HRA i.e. 15,000

2. Actual rent paid less 10% of salary: 12,000 less 10% of 40,000 i.e. 12,000 less 4,000 i.e. Rs. 8,000

3. Since Jaipur is not covered in above list so 40% of salary i.e. 40% of 40,000 i.e. 16,000.

As per method prescribed lower of all 3 would be reduced from salary i.e. 8,000 in this case. This, is how one can calculate HRA exemption from his total salary.

FAQ:

Q. A question which many people ask is whether one can claim HRA exemption even when HRA is not a component of salary?

Ans. In that case answer would be NO HRA exemption would be available. As per the calculation method first point is actual HRA received, now when no HRA is received same would be zero and in that case lower of the following would be zero and hence no HRA exemption would be available.

Q. Next and most common doubt which many people have that can one claim HRA even when company has not provided its benefit in Form 16 even when HRA is a salary component?

Ans. The answer to this is there can be many reason for the company to do so i.e. you might have not provided them with rent receipt or you might have left job in the middle and they might have not provided you that benefit. In any of the above scenario there is no restriction on employee to claim HRA if HRA is a component of salary and employee has actually paid rent.

This is when it is important to file Income Tax return because company might have deducted more TDS as HRA claim was not provided and you can claim refund of same by filing return.

Thus, with the above article I think many of the doubts related to HRA must be cleared which were there in minds of people.

 

Important Note: If a person chooses to opt for new tax slab rate under 115BAC, exemption of HRA won’t be available. To calculate the benefit you can download calculation sheet for same: https://www.taxontips.com/calculation-sheet-for-comparison-of-tax-payable-under-new-and-old-tax-regime-for-individual-and-huf-115bac/

To download the calculation Sheet CLICK HERE!!!!

To file your Income Tax return or salaried return CLICK HERE.

About the Author:

Naman Maloo (C.A., B.Com.)
He is currently working as Partner – Direct Tax with Jain Shrimal & Co. in Jaipur having experience in dealing Assessments, Tax Audit, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in

Linkedin

image_pdfPDFimage_printPrint
Tags: 2 house as self occupied
Previous Post

Requirement for Fresh registration of trust under section 12AB has been extended till 01.04.2021

Next Post

ICAI issuing notices to practicing CA’s who are member of Business network’s like BNI and others

Related Posts

Tax audit u/s 44AB to be scrapped?
Income Tax News

Extension of time limit for Tax audit of trust and file Form 10B and Form 10BB and ITR 7

September 18, 2023
Tax audit u/s 44AB to be scrapped?
Income Tax News

Turnover limit for Tax audit is Rs. 1 crore or Rs. 10 crore under section 44AB of the Act

September 18, 2023
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

Digital Signature Certificate (DSC) related issues and solutions on Income tax E-filing portal

September 16, 2023
How to calculate turnover in case of intra day and future and option trading for Income Tax purpose?
Income Tax News

Definition of turnover in relation to F&O and intraday as per Revised guidance note of ICAI on Tax audit for 2023

September 13, 2023
No TDS on interest income upto Rs. 40,000 from bank – Section 194A Limit revised
Income Tax News

Claim TDS credit deducted in next assessment year for income offered in earlier year [Read section]

September 9, 2023
Received mail from GSTN “Aggregate turnover being more than Rs. 5 Cr during FY 2019-20” What does this mean?
Income Tax News

Salaried employee receiving notices for claiming deduction under Chapter VI-A

September 7, 2023
Next Post
ICAI has announced a new MBA programme for Diploma in Management and Business Finance

ICAI issuing notices to practicing CA's who are member of Business network's like BNI and others

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Google Custom search

Recent Posts

  • Advisory: Geocoding Functionality for the Additional Place of Business – GST website
  • Multipurpose Empanelment Form (MEF) – 2023-24 | Now Open
  • Extension of time limit for Tax audit of trust and file Form 10B and Form 10BB and ITR 7
  • Turnover limit for Tax audit is Rs. 1 crore or Rs. 10 crore under section 44AB of the Act
  • Digital Signature Certificate (DSC) related issues and solutions on Income tax E-filing portal

Recent Comments

  • Srinivasan Venkatasubramanian Venkatasubramanian on GST turnover limit for services increased to Rs. 40 lakh by CBIC?
  • Notification under PMLA by Ministry of Finance which could affect CA, CS and CMA - Taxontips on CA, CS and CMA now under PMLA. KYC of clients required
  • ITR 4 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips – Taxontips on Businessman with turnover below 1 crore and having profit below 8% need to compulsorily get books of accounts audited: Let’s find out
  • Can a person earning income from speculative business transaction file return u/s 44AD of Income tax act - Taxontips on How to calculate turnover in case of intra day and future and option trading for Income Tax purpose?
  • Extension of last date for updation of Member’s Profile with GSTIN at Self Service Portal – Till 23rd April, 2023 - Taxontips on Updation of Member’s Profile at Self Service Portal with GSTIN to get GST credit till 15.04.2023

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Browse Topics by Date

September 2023
M T W T F S S
 123
45678910
11121314151617
18192021222324
252627282930  
« Aug    
  • GSTR 9/ 9C extended : AGAIN

    GSTR 9/ 9C due date to be extended to 31.10.2020 | E-invoicing will be voluntary in the beginning

    6457 shares
    Share 2583 Tweet 1614
  • How to pay Membership and COP fees of ICAI for 2020-21 |

    6351 shares
    Share 2540 Tweet 1588
  • Code/ Nature of payment 6CR updated by NSDL in challan 281 for paying TCS on sale of goods

    5732 shares
    Share 2293 Tweet 1433
  • Are all the due dates of tax audit and Income tax return for FY 2019-20 extended to 31.03.2021 by the bill presented in Lok sabha Dt. 18.09.2020

    4772 shares
    Share 1909 Tweet 1193
  • SFT transaction mentioned in Form 26AS | What does it mean? | Who reports it? | SFT codes transaction type

    3999 shares
    Share 1600 Tweet 1000

Recent Notification

Data of GST website under comparison of liability declared and ITC claimed tab not available

Advisory: Geocoding Functionality for the Additional Place of Business – GST website

September 21, 2023
ICAI has announced a new MBA programme for Diploma in Management and Business Finance

Multipurpose Empanelment Form (MEF) – 2023-24 | Now Open

September 20, 2023

RSS Taxontips

  • Advisory: Geocoding Functionality for the Additional Place of Business – GST website
  • Multipurpose Empanelment Form (MEF) – 2023-24 | Now Open
  • Extension of time limit for Tax audit of trust and file Form 10B and Form 10BB and ITR 7
  • Turnover limit for Tax audit is Rs. 1 crore or Rs. 10 crore under section 44AB of the Act
  • Digital Signature Certificate (DSC) related issues and solutions on Income tax E-filing portal
  • How to calculate Value of supply in case of online gaming including online money gaming [Read notification]
  • Introducing Electronic Credit Reversal and Re-claimed statement on GSTN
  • Definition of turnover in relation to F&O and intraday as per Revised guidance note of ICAI on Tax audit for 2023
  • Claim TDS credit deducted in next assessment year for income offered in earlier year [Read section]
  • Salaried employee receiving notices for claiming deduction under Chapter VI-A

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Site menu

  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Taxontips

TaxOnTips provides you all tax related solutions in easy way and update you with its regular updates & notifications Visit us for details.
We are based in Jaipur, India

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

No Result
View All Result
  • Login/Signup
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • About us
  • Contact us
  • Ask an expert/ Talk to an expert
  • Q & A
  • Privacy Policy
  • Terms of use

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

Book Phone consultation with expert

Sitting home or at your office and don't have time to visit CA's office or don't know where to consult CA. Book your consultation with an expert practicing Chartered Accountant and get your query solved.

Book a phone consultation for 30 minutes with our expert at a very basic cost.

Book consultation

No thanks, I'm not interested!