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Thursday, February 05, 2009

How much of your HRA is Income tax exemption..?

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How much of your HRA is tax exempt?

Look at your salary slip. Are you getting a House Rent Allowance (HRA) and do you know how it works? Do you understand that even small changes can affect your eligibility for HRA? Here we demystify the rules surrounding HRA so that you can avail of this exemption in the most tax-efficient manner. What is HRA? How is it calculated?

HRA is an allowance given by an employer to an employee to meet the latter’s rental accommodation expenses. The employee must not be the owner of this property.

The calculation of HRA is quite simple. As an employee, you need to submit the rent receipts to your employer showing the amount of actual rent paid. The amount of allowance is the lowest of the following three limits: rent paid less 10 per cent of salary; 40 per cent of salary (or 50 per cent if the rented premises are in Delhi, Mumbai, Chennai, or Kolkata); or actual HRA received from the employer.

How is salary defined for HRA purposes? Is it salary paid or taxable salary?

Actually, it is none of the above. For the purpose of HRA calculations, salary is defined as: basic salary; plus dearness allowance, if provided; plus commissions earned, if given as a fixed percentage of turnover achieved by employee.

An illustrative example
Rajan, an advertising salesman for a media company, lives in a rented accommodation in Delhi. He pays a rent of Rs 10,000 per month. He receives the following as his salary: his basic salary is Rs 12,000; dearness allowance is Rs 4,000; and HRA is Rs 8,000.
In addition, Rajan also receives a monthly commission of 3 per cent on an average monthly turnover of Rs 3 lakh achieved by him. This amounts to Rs 9,000 per month.

Rajan’s salary for the purpose of HRA exemption will be:
Basic salary: Rs 12,000
Dearness Allowance: Rs 4,000
Commissions earned Rs 9,000
Total salary: Rs 25,000

The HRA exemption will be the lowest of the following:
• Rent paid less 10 per cent of salary = Rs 10,000 less Rs 2,500 = Rs 7,500
• 40 per cent of salary (or 50 per cent if the rented accommodation is in Delhi, Mumbai, Chennai or Kolkata): Since the rented premises are in Delhi the 50 per cent limit applies = Rs 12,500
• Actual HRA received from the employer = Rs 8,000
The lowest of the above three amounts is Rs 7,500. This amount is exempt. The taxable amount is HRA received (Rs 8,000) less HRA exempt (Rs 7,500) = Rs 500.



What factors is HRA exemption sensitive to?

HRA exemption is based on four elements: rent paid; location of the premises; salary received, including commissions earned; and actual HRA received. If any of these items changes, then HRA computation also changes. Therefore, it is advisable to calculate HRA exemption separately for each period during which there is a change in any of the above factors.

If you stay in a property owned by your parents or spouse, can you still claim HRA?

To claim HRA, you must be offered HRA as a part of your salary, and you must be paying rent for a property that does not belong to you. If you live in a property owned by your parents or spouse, and you pay rent to them, then you can claim HRA. However, you must remember that this rental income paid to them needs to be shown as income in their tax return.

Suppose you own a house and you get a tax benefit on your home loan. Can you still claim HRA?

As long as you meet the criteria for both a home loan deduction and HRA exemption, you can get tax benefits on both. Home loan related tax benefits are available on repayment of principal and payment of interest on the loan. If you happen to live in a house that is not owned by you, and you pay rent for it, then if you are being offered HRA as a part of your salary, you can claim the HRA exemption. You might be living in rented accommodation in an area that is far away from your own property because of employment-related reasons, or in a different city altogether.



The authors are co-founders of iTrust Financial Advisors, one of India's leading independent financial advisory service companies (www.iTrust.in)

Courtesy :Indian Express

Anomaly Committee of the National Council (JCM) to settle the Anomalies arising out of the implentationof the 6th CPC recommendations:

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Anomaly Committee of the National Council (JCM) to settle the anomalies arising out of the implementation of 6th CPC recommendations.




No.11/2/2008-JCA
Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel Training
JCA Section
***********


OFFICE MEMORANDUM


Subject:- Anomaly Committee of the National Council (JCM) to settle the Anomalies arising out of the implentationof the 6th CPC recommendations


In accordance with the instructions contained in this Department's OM of even number dated 12th January 2009, it has been decided to set up, as indicated below, the Anomaly Committee of the National Council (JCM) consisting of representatives of the Official Side and the Staff Side to settle any anomalies arising out of the implementation of the 6th CPC recommendations:-


OFFICIAL SIDE :-
1. Secretary, Chairman Deptt. of Pers. & Trg.
2. Member (Staff) Rly. Board.
3. Secretary, Deptt. of Telecommunication.
4. Secretary, Deptt. of Posts.
5. Financial Adviser (Defence) Ministry of Defence.
6. Joint Secretary, (Pers) Ministry of Finance.
7. Joint Secretary, Deptt. of Personnel & Trg.
8. Deputy Secretary (JCA), Deptt. of Personnel & Trg.


STAFF SIDE :-
1. Shri. U.M. Pruohit


2. Shri. M.Raghavaiah


3. Shri. Rakhal Das Gupta


4. Shri. R.P.Bhatnagar


5. Shri. Guman Singh


6. Shri. C.Srikumar


7. Shri. S.K.Vyas


8. Shri. Ch.Sankara Rao


9. Shri. K.S.Murty


10. Shri. R.Srinivasan


11. Shri. K.K.N.Kutty


12. Shri. S.G.Mishra


The working of the Committee would be in terms of the conditions laid down in this Department's OM dated 12th January 2009 mentioned above.


(Dinesh Kapil)
Deputy Secretary to the Govt. of India


Source www.persmin.nic.in

The Organisation of the Chief Labour Commissioner known as Central Industrial Relations Machinery (CIRM)

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HISTORICAL PROSPECTIVE :
The Organisation of the Chief Labour Commissioner (C))known as Central Industrial Relations Machinery was set up in April, 1945 in pursuance of the recommendation of the Royal Commission on Labour in India and was then charged mainly with duties of prevention and settlement of industrial disputes,enforcement of labour laws and to promote welfare of workers in the undertakings falling within the sphere of the Central Government.
Combining the former organizations of the Conciliation Officer (Railways) and Supervisor of Railway Labour and the Labour Welfare Advisor, it started with a small complement of staff comprising Chief Labour Commissioner (C)) at New Delhi, 3 Regional Labour Commissioners at Bombay, Calcutta & Lahore and 8 Conciliation Officer and increased gradually consequent upon expanding labour legislation's in the Post-independence period, increased industrial activity in the country and growing responsibilities of the Organisation.
Presently there are 18 regions each headed by a Regional Labour Commissioner (C) with Headquarters at
Ajmer
Ahmedabad
Asansol
Bangalore
Bombay
Bhubaneshwar
Chandigarh
Cochin
Calcutta
Gwahati
Hyderabad
Jabalpur
Chennai
New Delhi
Patna
Nagpur
Dhanbad and
Kanpur.
Out of these, 14 regions have been placed under the supervision of three zonal Dy.CLCs(C) and 4 regional offices are supervised directly by Headquarters office of CLC(C).
SPECIFIC FUNCTIONS OF CIRM
The CIRM administers the Labour Laws in the industries for which The Central Govt. is the `appropriate Government' under that Act, Its functions therefore are:
* Prevention and settlement of industrial disputes;
* Enforcement of Labour Laws;
* Verification of membership of Trade Unions;
* Enforcement of Awards and Settlements;
* Conduct of inquiries into the breaches of Code of Discipline;
* Promotion of Works Committees and Workers' Participation in Management;
* Collection of statistical information;
* Defence of court cases and writ petitions arising out of
Implementation of labour laws.

VERIFICATION OF TRADE UNION MEMBERSHIP
GENERAL VERIFICATION :
The general verification to determine the relative strength of Central Trade Union Organisation is conducted with a view to giving them representation on various international and national conferences, Committees, Councils etc. The strength of a Central Trade Union Organisation is taken to be the combined membership of registered unions affiliated to the central trade unions. Only those Central Trade Union Organisations whose affiliates are spread over atleast four states and in four industries and have 5 lakhs memberships.
The Government would recognize such trade unions as central Trade Union Organisation. The verification is undertaken once in four years.
More Details Click the link : http://labour.gov.in/clc/



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