What are the incomes that are chargeable to Income tax under the head 'Salaries'? Give examples of tax-free perquisites. How is House Rent Allowance calculated under the head 'Sala... What are the incomes that are chargeable to Income tax under the head 'Salaries'? Give examples of tax-free perquisites. How is House Rent Allowance calculated under the head 'Salaries'?
Understand the Problem
The question is asking about the taxation and calculation of income under different allowances related to salaries. It seeks to clarify various aspects of required allowances and deductions that are applicable for an employee's taxable income.
Answer
Taxable incomes: Basic salary, allowances, bonuses. Tax-free perks: Medical facilities. HRA: Min of HRA received, 50% (or 40%) of salary, or rent paid minus 10% of salary.
The incomes chargeable to tax under 'Salaries' include basic salary, allowances, perquisites, bonuses, and commissions. Tax-free perquisites can include employer-provided medical facilities, educational facilities for children, and transportation passes. HRA is calculated as the minimum of: actual HRA received, 50% of salary (40% for non-metros), or rent paid minus 10% of salary.
Answer for screen readers
The incomes chargeable to tax under 'Salaries' include basic salary, allowances, perquisites, bonuses, and commissions. Tax-free perquisites can include employer-provided medical facilities, educational facilities for children, and transportation passes. HRA is calculated as the minimum of: actual HRA received, 50% of salary (40% for non-metros), or rent paid minus 10% of salary.
More Information
Tax-free perquisites often focus on benefits that assist employees without providing additional taxable income, thereby increasing their net benefit.
Tips
A common mistake is not correctly applying the conditions for HRA exemption, such as failing to account for the city of residence when determining the percentage of salary.
Sources
- Computation of Income under the Head Salary - HostBooks - hostbooks.com
- House Rent Allowance Meaning & HRA Exemption Calculation - kotaklife.com
- Perquisites in Income Tax: Meaning, Examples, Types, Taxability ... - cleartax.in
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