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Important Allowances and their Questions - Taxability of Allowances

Q1

What is Income from Salaries if employee receives 
ParticularsAmt Recd pmAmt spent as per bills during year
Basic Salary30000 
Uniform Allowance500040000
Academic and Research Allowance200016000
Travelling Allowances300037000
Helper Allowances50000
Daily Allowance2000No Bills but Declaration given to Company of amt spent

--answer--

ParticularsAmt Recd pmAmt recd per annumAmt ExemptBalance Amt taxable
Basic Salary300003600000360000
Uniform Allowance5000600004000020000
Academic and Research Allowance200024000160008000
Travelling Allowances300036000360000
Helper Allowances500060000060000
Daily Allowance200024000240000
INCOME FROM SALARIES   448000

--endanswer--

Q2

What is Income from Salaries if employee receives 
ParticularsAmt Recd pm 
Basic Salary40000 
Children Education Allowance1500(500 pm*3 childen)
Children Hostel Allowance60002000 pm * 3 children
Transport Allowance2000(He does not submit bills)

--answer--

ParticularsAmt recd per annumAmt ExemptBalance Amt taxable
Basic Salary4800000480000
 (40000*12)  
    
Children Education Allowance18000240015600
 (1500*12)(100*2*12) 
    
Children Hostel Allowance72000720064800
 (6000*!2)(300*2*12) 
    
Transport Allowance24000192004800
 (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 Received8000 
Rent Paid-10%*(Basic+DA)6000(10000-10%*40000
40%*(Basic+DA)1600040%*(40000+0)
HRA Exempt6000 
HRA Exempt P.A.72000(6000*12)

    

ParticularsAmt recd per annumAmt ExemptBalance Amt taxable
Basic Salary4800000480000
 (40000*12)  
    
Children Education Allowance18000240015600
 (1500*12)(100*2*12) 
    
Children Hostel Allowance72000720064800
 (6000*!2)(300*2*12) 
    
Transport Allowance24000192004800
 (2000*12)(1600*12) 
    
HRA960007200024000
 (HRA Taxable)(From Working Note) 
    
INCOME FROM SALARIES  589200

 

 --endanswer--

Q4

Basic Salary40000 
Lunch Allowance4000 
Transport Allowance2500(No Bill Submitted)
Children Education Allowance4500(1500*3 children)
Variable Pay30000 
HRA15000(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.)                14,00018000-10%*(40000+0)
40%(Basic+D.A.)  {50% in case of Metro Cities}                16,00040 % *40000
   
HRA Exempt                14,000 
HRA Exempt p.a              168,000 

 

PARTICULARSAMT RECD PER MONTHAMT RECD PER ANNUMEXEMPTTAXABLE
Basic Salary40000               480,000               -        480,000
Lunch Allowance4000                 48,000               -           48,000
Transport Allowance2500                 30,000     19,200         10,800
Children Education Allowance4500                 54,000        2,400         51,600
Variable Pay30000               360,000               -        360,000
HRA15000               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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