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Former Member
May 31, 2008 at 06:38 AM

URGENT: Problems in Income Tax -HRA & Medical allowance

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Dear Gurus,

As required please refer to the below mentioned note:-

1) HRA Exemption:- As per section 10(13A) of the IT Act,1961I)

If any employee is residing in Bombay/Delhi/Calcutta/Madras

For the purpose of getting exemption for HRA, the least of the following will be allowed

a) HRA Actually received

b) Rent paid in excess of 50% of salary (Salary here means basic + DA + commission)

c) 50% of salary (salary here means basic + DA +Commission)

The problem faced in SAP is that it calculates HRA exemption on basic salary instead of taking it on basic + DA + commission as a result employee will get incorrect HRA exemption benefit.

II) If any employee is residing in other cities

The above conditions will remain as it is, but incase of condition c it will be 40% of salary.

As regards Medical allowance:- If any employee is producing medical bills then he/she should get tax benefit on the same. Which is not done in SAP.

Please Advised

Regards

MHPO