Organizations in India follow different methods for arriving at the House Rent Allowance (HRA) exemption, while calculating income tax on employee salary. Each method produces a different exemption amount. This begs the question, “which is the correct method?” Payroll managers have different opinions on how the exemption should be calculated. Let us examine the methods used for the HRA exemption calculation, and see which method goes well with the letters and spirit of Section 10(13A) of the Income Tax Act, 1961.
As per the Indian income tax law, the HRA exemption should be calculated as the least of the following.
1. Rent paid in excess of 10% of basic salary.
2. Actual HRA received by the employee.
3. Forty percent of basic salary, if the location of the residence is in a non-metro city/town or 50% of basic salary, if the location of the residence is in a metro city
From the above “least of three” rule, it is clear that HRA exemption amount is determined by a number of factors — Basic pay, location of the residence, rent paid by the employee, and the HRA paid to the employee.
So far, so good. The “least of three” rule looks easy to understand and implement. However, the same rule can be applied in different ways to create different methods of HRA exemption calculation.
According to a new Section 80 TTA introduced in the union budget last year, savings account interest income up to Rs 10,000 will get a tax deduction as per this section. The savings account which you hold in all banks, that is public sector, private sector as well as foreign banks come under this section. That’s not all, the deduction is applicable even if it is in a co-operative bank or India Post.
Moreover, both individuals as well as Hindu undivided family qualify for this deduction.
All accounts: “Keep in mind, that this deduction of Rs 10,000 on savings account interest income is all bank accounts put together,” said Anil Rego, Chartered Accountant and CEO, CEO of Right Horizons, Investment Advisory and Wealth Management. There is a good possibility that you might be able to make the most of this deduction if you have parked your three-six months emergency funds in savings banks accounts. Many people do this.
Finance Minister has Just announce the Income Tax rates for Individuals , HUF(Hindu Undivided Family ),Female Senior citizen and very senior citizen In Union Budget 2012-13 and these rates are applicable for Financial year 2012-13 .We have prepared a small Calculator which will help you to calculate the tax benefit due to change in Income Tax rates and changes in slabs. You just have to click on "click on edit" button and then fill your taxable income in yellow cell , income tax benefit for Financial year 2012-13 due to union budget 2012-13 will be shown to you. Income tax calculation is shown for Individual less than 60, female less than 60 and individual between 60 to 80 year and very senior citizen above 80Years separately for each categories.
Finance Minister has Increased the exemption Limit to 2,00,000 from earlier 1,80,000 .Further Tax slab for 20% has now extended up to 10 Lakhs . No change in exemption limit for senior citizen and very senior citizen. After implementation of these limit and changes maximum benefit to females assessee less than 60 is 21630 , male less than 60 will be 22660 and senior citizen and very senior citizen tax benefit will be 20600.
Finance Minister has Increased the exemption Limit to 2,00,000 from earlier 1,80,000 .Further Tax slab for 20% has now extended up to 10 Lakhs . No change in exemption limit for senior citizen and very senior citizen. After implementation of these limit and changes maximum benefit to females assessee less than 60 is 21630 , male less than 60 will be 22660 and senior citizen and very senior citizen tax benefit will be 20600. You can claculate your tax benefit form our tax calculator available here after budget 2012-13
Deduction of Interest up to 10000 on saving bank account has also been allowed from Fy 2012-13(read section 80TTA)
A new deduction of 50000 Rs also proposed for investment in equities Rajiv Gandhi Retail Equity scheme for income up to 10 Lakhs details awaited .(read section 80CCG)
No change in Corporate tax.
However 80CCF deduction has been withdrawn .(Good bye to 80CCF infrastructure Bonds )
RATES OF INCOME-TAX after Budget 2012 presented on 16.03.2012
Good news for taxpayers , now you can check your status of Income Tax Refund with click of their mouse! the scheme is called Refund pilot scheme.As shown in TIN-NSDL website you can check refund status Assessment year 1998-99 to 2010-11.The Scheme is restricted to few CIT butwill soon extended to other area also. Status will be available only for those taxpayers whose refunds are to go through refund banker pilot scheme.To check the refund status please fill the form and press submit and you will guided to new page from where you can check your refund status by pan ...so check now.