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I work in a bank as a probationary officer with ₹26,640 as my basic salary. I reside in a house that is on lease, receiving ₹5,000 per month from my employer in lieu of house rent allowance (HRA). But I pay ₹6,800 per month as rent. Will I get any tax benefit and, if so, up to what amount?
Sudhir
As per the provisions of the Income-Tax Act, 1961, any allowance provided by an employer to an employee for rental payment with respect to residential accommodation is calculated for tax based on one of the following provisions: a. Actual HRA received; b. 50 per cent of eligible salary (metro cities)/40 per cent of eligible salary (non-metro cities); c. Actual rent paid, less 10 per cent of salary. Eligible salary for calculating HRA exemption is basic salary and dearness allowance. Assuming that your eligible salary is ₹26,640 per month and you are paying rent for an accommodation located in a metro city, you will be eligible for monthly exemption of ₹4,136 in respect to the HRA received.
Is it mandatory for a person to file income-tax returns if the individual is (a) aged below 50 years and total gross earning is less than ₹2.50 lakh per year, or (b) a senior citizen above the age of 80 years and their total gross earnings is less than ₹4.5 lakh per year?
HA Rangaswamy
As per the provisions of the Income-Tax Act, 1961, an individual whose total income exceeds the maximum amount that is not chargeable to tax (i.e. the threshold limit up to which the income is exempt from tax) is required to file his/her return of income on or before the specified due date. However, where an individual qualifying as a Resident and Ordinarily Resident in India for the concerned financial year holds any asset (including financial interest in any entity) or is a beneficiary of any asset located outside India, then he/she is required to file the return of income in India even if the total income of individual does not exceed the maximum amount not chargeable to tax.
As per provisions applicable for FY 2016-17, the threshold limit up to which the income is not taxable is ₹2.5 lakh for an individual aged below 60 years. In the case of individuals above 80 years, the said limit is ₹5 lakh. Thus, if the individual neither holds any foreign asset nor is a beneficiary of any foreign asset, then he/she is not required to file income tax returns.
The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in
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