Rent paid

This query is : Resolved

b.sharma (Querist)
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17 February 2012 Dear sir

I have paid rent @3000/- per month Rs 36000/- for the f.y 2010-11. but i have not recd any H R A on salary. My salary is 19000/- per month in Faridabad. is the amt of Rent is delectable under any section of Income tax.
Pl. calculate my tax.
I have LIC receipt Rs 11940/-
Tution fees paid for children 400 P.mx12=4800.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 February 2012 Actually rent is not deductible. If you get HRA, then certain part of it is exempt, when you pay rent towards the accommodation.
.
For current year's income AY 2012-13 rates are applicable.

Total Salary 228000
Deduction 11940+4800=16740

Total Income 211260

Tax payable 3126
Educational Cess 94.

Total tax Liability 3220.

CA Rushikesh Kolhe

CA Rushikesh Kolhe (Expert)
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17 February 2012 I am sorry to say that Mr Bafna have said only part of the exemption regarding rent deduction.
There is one section 80GG which give benefit to those person who do not receive HRA in their salary.
The section says that any expenditure incurred by assessee on paymnet o rent in respect of any furnished or unfurnished accommodation in excess of 10% of his total income before making any deduction under this section the Lower of the following three will be allowed as deduction from his total income.
1. Rs 2000 per month or
2. 25 % of total income after allowing deduction under chapter VI A except this section
3. Expenditure incurred in excess of 10% of the total income after allowing deduction under chapter VI A except this section.
Hence your calculation goes like this
Total Salary 19000*12 = 2228000
Total Rent paid 3000*12 = 36000
LIC = 11940 Tution Fees = 4800
Hence deduction under Sec 80GG will be lower of following
1. Rs. 2000 pm that is Rs24000 or
2. 25% of total income 25%(228000-11940-4800) = 52815 or
3. 36000-10%(228000-11940-4800) = 14874
Hence deduction under sec 80GG will be 14874

Now tax calculation
Total income 228000
Deduction under 80C
LIC 11940
Tution Fees 4800
Deduction under Sec 80GG = 14874
Taxable Income = 228000-11940-4800-14874 = 196386
Less Basic Exemption limit = 180000
Hence Net Taxable Income 196386-180000 = 16386
Tx on it @ 10% = 1639
Edu Cess @ 3 % on 1639 = 49.17
Hence total Tax laibility = 1639+49 =1688

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