• a. 40% or 50%* of the base pay plus dearness allowance (DA)
• b. The actual amount received
• c. Rent is paid at 10% of the base pay and dearness allowance (DA)

You cannot deduct house rent allowance expenses if you choose the new tax system starting in the fiscal year 2020-21.

Conveyance allowance:

Conveyance allowance, often known as transportation allowance, is a benefit provided to employees to reimburse them for their travel expenditures to and from their place of home and office.

Note: In the 2018 Union Budget, a standard deduction of Rs 40,000, now Rs 50,000, was implemented in place of the transit and medical allowances.

LTA (Leave Travel Allowance):

Tax exemption is available for leave travel allowance. It is given to workers to pay their travel expenses when they take a leave of absence from work. Section 10(5) of the Income Tax Act of 1961 exempts the amount paid as leave travel allowance from tax solely on the actual travel expenditures. The leave travel allowance only applies to domestic travel, and the mode of transportation must be:

Air, Train, or Public Transportation.

The exemption also applies only to LTA granted by the employer.

Medical coverage:

A medical allowance is a predetermined amount granted to an organization's workers to cover medical expenses.

Note: In the Union Budget of 2018, a standard deduction of Rs 50,000 (now Rs 60,000) was implemented instead of the travel (Rs 19,200) and medical (Rs 15,000) allowances.

Allowance for books and periodicals:

A books and periodicals allowance is a sort of allowance given to employees to assist them afford the costs of:

purchasing books, Periodicals, and Newspapers.

It is tax-free up to the amount of real expenditure spent on the purchase of books and magazines.

Perquisites

Perquisites, often known as fringe benefits, are advantages that certain employees receive because of their official employment. These are often non-monetary perks that are provided in addition to cash compensation. Perquisites include things like providing a car for:

personal use, providing rent-free housing, paying the premium on a personal accident coverage, and So on.

The monetary worth of the perquisites is added to the employee's compensation, and tax is paid on them.

Bonus

A bonus is a sort of remuneration given to an employee by their employer to supplement their base income or salary. A corporation may utilize bonuses to recognize accomplishments, to express thanks to employees who reach lifetime milestones, or to persuade potential employees to join the ranks. A bonus earned by an employee is taxable in the year it is received.

Gratuity

Gratuity is a one-time payment made by employers to employees who are leaving the company. This is only available to workers who have worked for the firm for five years or more.

The gratuity is paid in appreciation for the services provided by the employee throughout his or her employment. The Indian Law applies to the majority of businesses with ten or more employees.

Gratuity earned while at work is completely taxed; however, gratuity paid upon retirement is exempted under Section 10(10) in the following circumstances:

For government workers:

The amount of gratuity is completely excluded. Non-government employees should:

The exemption amount for private sector workers covered under the Payment of Gratuity Act of 1972 will be the lowest of the following:

15/26 x monthly wage x number of completed years of service, Maximum amount received: Rs. 2 million

The exemption amount for workers not covered by the Payment of Gratuity Act of 1972 will be the lowest of the following:

1/2 x average monthly income x number of completed years of service, Maximum amount received: Rs 2 million

Taxation for professionals

Professional tax is a state government tax placed on the revenue received by salaried employees and professionals such as:

Chartered accountants, Physicians, and Attorneys, among others.

Professional tax is are calculated differently in each state. The highest sum payable in a calendar year is INR 2,500. Employers collect professional tax at defined rates from employee salaries and pay it to the State Government on their behalf. The money raised goes to the Employment Guarantee Scheme and the Employment Guarantee Fund.

ESIC (Employees' State Insurance Scheme of India)

If a company has ten or more employees with a gross monthly income under Rs 21,000, the employer must provide ESIC coverage. The company will contribute 4.75 percent of gross compensation, while the employee will contribute 1.75 percent of gross salary.

Kanakkupillai HRA Calculator

With the Kanakkupillai HRA Calculator, calculating your house rent allowance has never been simpler. This user-friendly tool makes it easy to accurately calculate your HRA, saving you time and hassle.

We at Kanakkupillai understand the importance of accurate calculations and strive to make the process as seamless as possible. Try our HRA Calculator today and see the difference for yourself!

We at Kanakkupillai are committed to providing our customers with the best possible experience, and we're always looking for ways to improve. If you have any suggestions for how we can make the HRA Calculator even better, feel free to let us know. We're always looking for ways to make our customers' lives easier.