Shivaca
Sr. Executive - F& A
Skhota
D.g.m.(hr & Admin.)
+2 Others

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Dear Community Members, Can any one clarify my following query:
I am working as a senior managerial position in a large steel company.As per terms & conditions of my appointment, I am being paid HRA @15 % of my Basic salary, but the same is being deducted from my monthly salary fully as I have been provided with company\'s accommodation. But our finance people are deducting Income Tax over the entire amount of HRA disagreeing with my contention that since company is deducting the entire amount of my HRA towards House Rent from my salary ,which is also reflected in my salary slips, said amount should not be included in my taxable income. My query is whether I.Tax should be deducted from my HRA amount or not.

Dear Sir,
Your HRA is not a Allowance. It is a perquisites in this case. So it not reflect in your taxable salary. And one more think, the calculation of taxable Accommodation is
Ex: If your Basic salary is Rs. 100000 pa
15% of basic salary = Rs. 15000
Less: Rent Paid by employee(u) = 15000. The sum is 0. So it not include in your taxable salary.
Suppose:
15% of basic salary = Rs. 15000
Less: Rent Paid by employee = 5000. The sum is Rs. 10000. The 10000 is a taxable it will reflect in your tax computation.

Dear Shivaca,
Thanks a lot for your comments.Our accounts people are insisting for production of HR receipt to consider my HRA to be non taxable income.I could not find any logic in their such stand as the company is mentioning the amount deducted under HR dedn. col. of salary payment sheet as well as as in my salary slip.In my view as HR Head of the mines ,there is no necessity of issue of a separate HR receipt from employer.More over when the Accounts head is the salary passing/disbursing authority and he is authorised to deductcorrect amt of tax at source and deposit the same with IT department ,I fail to understand their such stand.Kindly offer your views with any case law/circular interpreting HR deduction/HR receipt/Role of Accounts head of an estt. in case of salaried employees,if it is possible on your part .
Thanks & Regards,
S.K.Hota
9.6.13

Dear Sir,
I should know,
1. who is house owner? Employer or others
2. If others how much actual rent ?
2. How much do you pay for rent every month ? { without deduction of employer }
3. Who pay Rent to House owner?

Dear Sivakumar,
The reply to your queries are given below:
1.The house accomodation is provided to me by the employer(Company),which belongs to the company.
2.Not Applicable to this case
3.I am getting HRA @ 15% of my basic(Rs.31000) i.e Rs.4650/- every month.The same amount (Rs.4650/-)is being deducted from
my salary under House Rent Head every month.(in case my basic will be increased,the HRA & house rent amount will also be increased ,though the housing accomodations remains same.)
4.Company as the owner of the house keeps the HR amount deducted from my salary with it.
Thanks& Regards,
S.K.Hota
10.6.13

Sir, In this case they need not ask Rent Receipt from you. If basic salary increase the HRA should be increase but rent may be same.
Dear sir,

Please go through the below given Notification, to add value of perquisites, in total salary, for the calculation of Tax on salary

Notification No. 94/2009

F.NO. 142/25/2009-SO (TPL)

Dated 18-12-2009

In exercise of the powers conferred by section 295 read with sub-section (2) of section 17 of the Income-tax Act, (43 of 1961). The Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namlely :-

(1) These rules may be called the Income-tax (13th Amendment) Rules, 2009.

(2) They shall be deemed to have come into force on the 1st day of April, 2009.

In the Income-tax Rules, 1962, for rule 3, the following shall be substituted, namely: -

“3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—

(1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the Table below:

Sl. NO. Circumstances Where accommodation is Unfurnished Where accommodation is furnished
(1) (2) (3) (4)
(1) Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State.
License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee. determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for he same by the employee during the previous year.
(2) Where the accommodation is provided by any other employer and—
(a) where the accommodation is owned by the employer, or (i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census;
(ii) 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census;
(iii) 7.5% of salary in other areas,
in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee.
The value of perquisites as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, refrigerators, other household ap plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.

The deduction available is the least of the following amounts:
a. Actual HRA received;
b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or
c. Actual rent paid less 10% of basic salary + DA
you may claim the HRA as it has no bearing towards your home loan interest deduction. Both can be claimed.
This calculator shows you on what part of your HRA you have to pay taxes i.e. how much of your HRA is taxable and how much is exempt from tax.
The least of the will be considered as the deduction under this section:
a. Rs 5,000 per month;
b. 25% of adjusted total income*;
c. Actual Rent less 10% of adjusted total Income*
*Adjusted Total Income means Total Income Less long-term capital gain, short-term capital gain under section 111A and Income under section 115A or 115D and deductions 80C to 80U (except deduction under section 80GG).
If pay rent for any residential accommodation occupied by you, but do not receive HRA from your employer, you can still claim the deduction under Section 80GG.
Conditions that must be fulfilled to claim this deduction:
a. You are self-employed or salaried
b. You have not received HRA at any time during the year for which you are claiming 80GG
c. You or your spouse or your minor child or HUF of which you are a member do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry on business or profession.
In case you own any residential property at any place other than the place mentioned above, then you should not claim the benefit of that property as self-occupied. The other property would be deemed to be let out in order to claim the 80GG deduction.

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