Tax Deduction on HRA

For any salaried person, one of the major worry is how to calculate the tax deduction available on the HRA - House Rent Allowance. This is especially true when you have no help around like a CA friend. And, when you ask many people, you end up with so many conflicting versions that result in more confusion.

The amount of HRA exempt is the least of these:

The actual amount of allowance received by the assessee in the relevant period during which the rental accommodation was occupied by him The amount left after deducting one-tenth of the assessee's salary for the relevant period from the actual rent paid by him In case the house is in Mumbai, Calcutta, Delhi or Chennai, 50 percent of the salary of the assessee in the relevant period In case the house is in any other place, 40 percent of the salary of the assessee in the relevant period

Calculating HRA

The deduction is available only for the period during which the rented house is occupied by the employee and not for any period after that. For example, during the year 2008-09 , assume an assessee resides in Bangalore and gets a salary of Rs 8 lakhs as basic and Rs 3 lakhs as HRA. He pays an actual rent of Rs 2.4 lakhs.

In this case, the amount of HRA exempt would be:

Actual HRA received: Rs 240,000 Excess of rent paid over 10 percent of salary, i.e., Rs 2.4 lakhs less Rs 80,000: Rs 1.6 lakhs 40 percent of salary (as the accommodation is in Bangalore), i.e., 40 percent of Rs 8 lakhs: Rs 3.2 lakhs. As, out of these, Rs 1.6 lakhs is the least, it will be allowed as a deduction from salary for the year.

This is an extract from an article in the Economic Times, which gives details about how to understand the HRA component of your payslip.

Happy reading...

Warren Buffett speaking about his business at University of North Carolina

This is one more of Warren Buffett's video where he talks about his and Berkshire's investment philosophies with the students of University of North Carolina..

Really enjoyable...

Warren Buffet speaking at University of Florida

Warren Buffet speaks to the MBA students at University of Florida.

The post is a bit long, 1 hr 27 mins 35 secs to be exact, but it is worth the listening.

Listen to him speak about how he chooses a business, the factors that lead to him choosing Coca Cola, Gillete, or any of those great companies he own.

My Backpacker's Diary... Part III

(This was posted on 26th December 2006)

Earlier parts:
My Backpacker's Diary.. Part I
My Backpacker's Diary.. Part II

A screeching halt, a coarse voice announcing that we are halting for food and commotions among the co-passengers brought me back from my reverie. Not feeling hungry because of the heavy breakfast, I was slowly coming to my senses when my eyes suddenly popped up. I saw a cutie-pie standing up two rows behind mine on the other side. My first instinct was to check whether I was still in a trance. I couldn’t believe that I failed in finding her out in the first time itself. I mean, how could I…

Anyway, not wanting to waste more time, I first checked who were accompanying her - a bespectacled boy, a middle-aged uncle and of-course, a middle-aged aunty. They were going to the restaurant out-side and naturally, I followed them. A few glances and a few tricks, and I could start a conversation with the boy with the glasses. A few more niceties later, and a few furtive glances afterwards, I decided to talk to them as soon as we reached the destination. Finally, after almost five hours of bitter sweet journey, we reached PuttaParthi.

After alighting, I started talking to the middle-aged uncle, asking for his help in going about the Darshan. But to my bewilderment, they were not going for Darshan, or so it seemed. They headed straight to a hotel. I could see the cutie-pie exchanging smiles with her brother, well aware that I have failed, failed again.

I was feeling disappointed, ruing all the missed chances that life offered me. They flashed by as life supposedly flashes back before the eyes of a dying man. As Yogi Berra would have said - Its déjà vu all over again. You know it, another chance gone awry… chances, that come few and far in between.

But, Hey! As Yogi would have said – Its aint over till it’s over. You know chances will come. Just be more alert next time around… you never know... As the cliché goes... Buses and girls keep coming. Just be ready for it…

I joined the queue of the devotees waiting to get a glimpse of the BABA. I talked to a few people, from India and abroad. I was impressed at the numbers of followers the BABA has, gathered a lot of information about BABA’s miracles, his charitable works and lots of other things. After a long wait, saw the smiling BABA for whom I had traveled for five hours from Bangalore, and I along with others bowed before Him.

Followed it with a visit to other places of interests such as the Ashram canteen, the numerous educational institutions, the super-specialty hospital, the Gokulam or the cow shed of the Ashram and after shopping for a few souvenirs, it was time for me to board the return bus. Everybody inside was agog with his or her own account of the BABA.

Slowly, the tiredness of the journey gripped them and almost all of them were sleeping. I also thanked God for a fruitful journey, praying for a better life and luck next time around.

We reached Bangalore around mid-night, tired but satisfied… just almost the way one feels after a spontaneous, passionate round of love making.

Spent… yes, but you know it’s well spent...

Wish all of you a Merry Christmas and a Happy New Year 2006.

My Backpacker's Diary... Part II

(This was posted on 26th December 2005)

Also:
My Backpacker's Diary... (Part I)

The next thing one generally does is to give a look at the co-passengers and exchange a few half smiles. I also try to study their profile; and unmistakably, journey after journey, year after year, their types always remain similar. An old retired couple in the front seats; one or two small groups of friends; a couple of family groups with small or grown-up kids; a few individual passengers, two of them would be furiously devouring the newspaper as if their lives depended on it; and of-course, a newly-wed couple to complete the list. Of all the places, why do honeymooners choose PuttaParthi is beyond my comprehension. It might be God’s way of maintaining the normal distribution; or may be they wanted to take divine blessings before starting on the act… a little bit of extra help, you never know.

The bus maneuvered through the streets and traffic to reach the Hyderabad highway, also known as the Bellary highway, passing by the Golf club, Palace grounds, Hebbal and Yelahanka in between and the splendid air force station afterwards. In the mean time I was enjoying the beauty of an idyllic Saturday morning Bangalore.

The cold December weather was already working its magic on the newly-weds. By virtue of being strategically seated, I was able to see all the coochi-cooing they were involved in. The resulting effect was almost unbearable. There is no better way to remind a person about the uselessness of his life. Throw him on a long journey on a wintry morning without a suitable female companion and curse him to watch all these with furtive glances. Probably, the closest competitor would be the plight of a full grown young man in a harem, watching the inhabitants busy in work, with his hands and legs tied to two poles far apart. Oh merciful God, where art Thee? Curse me to a life of loneliness and solitude. I shall gladly accept that; at least porn is freely available in the corner CDs shop and I have a running account with them.

Instead of reminding myself of my incompetence in overcoming forced celibacy, I decided to do something positive and turned towards the person on the side seat. This gentleman, about forty, had his forehead smeared with 3 lines of ash and a round vermilion spot in the middle. My sudden directional shift startled him… gotcha… he was of course using his height to see the spectacle. After the first minute of awkwardness and discussion on a few desultory topics, the talk veered towards God and His miracles… aaahhhh… I felt like caught between the devil and the deep sea. After almost rudely avoiding him, I spared myself of further boredom.

Two people in the front seats were talking loudly to each other; may be with a desire to make others privy about the affairs of their office, interjected, of course, with subtle Hindi invectives suitable for the person concerned, depending upon whether that is the boss they are talking about, or one from the same department, or from a different department; and, a few loud mobile calls in between. The retired couple, after a few rounds of bhajans, was deep in sleep, troubling none afterwards. The small kids were busy among themselves, sometimes fighting, sometimes laughing for no apparent reason; in short being very much like kids and their parents, well, very much like parents.

Having nothing better to do, I decided to indulge myself with the favourite pass time of the intellectuals. The morning haziness was slowly getting cleared; the sun was slowly coming to its full force. I could see a hill near Yelahanka losing its greenery for the builders’ trucks were busy carrying the crushed stones from the hill. I could also see small children working as hawkers and selling their stuffs to the passersby for a few rupees daily. I analyzed that politicians are the reason behind all these; of course the prevailing corruption is a major factor, but that also could be attributed to the politicians. Satisfied with my efforts at finding the root cause to the problems of the country, I slowly plunged into a reverie…

Next: My Backpacker's Diary... (Part III)