KEY POINTS OF SALARIES CHAPTER OF INCOME TAX ACT 1961 for CBSE COMMERCE NET

SALARIES ( PART 1)



1.HOUSE RENT ALLOWANCE:
Section 10(13A) 


House Rent Allowance (HRA.) An employer includes certain allowance in the remuneration of the employee termed as House Rent Allowance or HRA. This allowance is used by the employee to meet the rental expenses for his/ her accommodation.


The least among the three will be allowed as deduction
1)The HRA amount received from the employer
2) Actual amount paid for rent minus 10% of basic salary*
3)50% of salary (metro city) and 40% HRA for (non-metro cities).

*salary means=basic pay+DA(retirement benefit)+commission(fixed percentage )

2.Fully taxable allowance

Dearness allowance
City compensatory allowance
Medical allowance
tiff in allowance
servant allowance
project allowance
overtime allowance
warden allowance
\family allowance

3.Fully exempt allowance

1.allowance given to UNO employees
2.allowance given to judges of supreme court
3.sumptuary allowance given to judges of high court and supreme court
4.Indian citizen who is government employee rendering service outside India.



4.Allowances received for performance of duties 
(exempt to the extent actually incurred)

The following allowances prescribed by the Central Board of Direct Taxes under Rule 2BB of the Income-tax rules are fully exempt to the extent actually incurred by the employee and any saving out of such allowance will be fully taxable :

1.Conveyance Allowance
2.Travelling Allowance
3.Daily Allowance
4.Research Allowance
5.Helper Allowance
6.Uniform Allowance


5.Allowance exempt up-to a notified limit

Children Education Allowance (maximum 2 children)Rs. 100/- p.m. per child
Children Hostel Allowance (maximum 2 children)Rs. 300/- p.m. per child
Transport AllowanceRs. 1600- p.m.
      Or
Rs. 3200/- p.m. (for handicapped)
Any Allowance granted to an employee working in any transport systemRs. 10,000/- p.m.
Or
70% of allowance
(whichever is lower)
Tribal Area AllowanceRs. 200/- p.m.
Underground AllowanceRs. 800/- p.m.
Compensatory Field Area AllowanceRs. 2,600/- p.m.
Compensatory Modified Field Area AllowanceRs. 1,000/- p.m.
Counter-insurgency allowance to members of armed forcesRs. 3,900/-p.m.



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