Important Allowances and their Questions - Taxability of Allowances

Q1

What is Income from Salaries if employee receives  
Particulars Amt Recd pm Amt spent as per bills during year
Basic Salary 30000  
Uniform Allowance 5000 40000
Academic and Research Allowance 2000 16000
Travelling Allowances 3000 37000
Helper Allowances 5000 0
Daily Allowance 2000 No Bills but Declaration given to Company of amt spent

--answer--

Particulars Amt Recd pm Amt recd per annum Amt Exempt Balance Amt taxable
Basic Salary 30000 360000 0 360000
Uniform Allowance 5000 60000 40000 20000
Academic and Research Allowance 2000 24000 16000 8000
Travelling Allowances 3000 36000 36000 0
Helper Allowances 5000 60000 0 60000
Daily Allowance 2000 24000 24000 0
INCOME FROM SALARIES       448000

--endanswer--

Q2

What is Income from Salaries if employee receives  
Particulars Amt Recd pm  
Basic Salary 40000  
Children Education Allowance 1500 (500 pm*3 childen)
Children Hostel Allowance 6000 2000 pm * 3 children
Transport Allowance 2000 (He does not submit bills)

--answer--

Particulars Amt recd per annum Amt Exempt Balance Amt taxable
Basic Salary 480000 0 480000
  (40000*12)    
       
Children Education Allowance 18000 2400 15600
  (1500*12) (100*2*12)  
       
Children Hostel Allowance 72000 7200 64800
  (6000*!2) (300*2*12)  
       
Transport Allowance 24000 19200 4800
  (2000*12) (1600*12)  
       
INCOME FROM SALARIES    

565200

--endanswer--

Q3

Suppose in Q2 Employee receives HRA of 8000 PM  

He works in Delhi and lives in Noida where he pays rent of 10000 p.m.  

--answer--

HRA Exemption Computation    
Actual HRA Received 8000  
Rent Paid-10%*(Basic+DA) 6000 (10000-10%*40000
40%*(Basic+DA) 16000 40%*(40000+0)
HRA Exempt 6000  
HRA Exempt P.A. 72000 (6000*12)

    

Particulars Amt recd per annum Amt Exempt Balance Amt taxable
Basic Salary 480000 0 480000
  (40000*12)    
       
Children Education Allowance 18000 2400 15600
  (1500*12) (100*2*12)  
       
Children Hostel Allowance 72000 7200 64800
  (6000*!2) (300*2*12)  
       
Transport Allowance 24000 19200 4800
  (2000*12) (1600*12)  
       
HRA 96000 72000 24000
  (HRA Taxable) (From Working Note)  
       
INCOME FROM SALARIES     589200

 

 --endanswer--

Q4

Basic Salary 40000  
Lunch Allowance 4000  
Transport Allowance 2500 (No Bill Submitted)
Children Education Allowance 4500 (1500*3 children)
Variable Pay 30000  
HRA 15000 (Rent receipts submitted of 18000  ,he lives and stays in Hyderabad)

 

--answer--

Working Note for HRA Exemption

Actual HRA Received                 15,000  
Rent Paid-10*(Basic+D.A.)                 14,000 18000-10%*(40000+0)
40%(Basic+D.A.)  {50% in case of Metro Cities}                 16,000 40 % *40000
     
HRA Exempt                 14,000  
HRA Exempt p.a               168,000  

 

PARTICULARS AMT RECD PER MONTH AMT RECD PER ANNUM EXEMPT TAXABLE
Basic Salary 40000                480,000                -         480,000
Lunch Allowance 4000                  48,000                -            48,000
Transport Allowance 2500                  30,000      19,200          10,800
Children Education Allowance 4500                  54,000         2,400          51,600
Variable Pay 30000                360,000                -         360,000
HRA 15000                180,000    168,000          12,000
Income From Salaries             962,400

 

  1. Income Tax
  2. Income from Salaries
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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