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Doctors, non practicing allowance (npa) and hra benefits

vivek (Assistant Professor) (35 Points)

18 December 2012

Hi Friends,

I am a doctor working in the central governemnt in an educatrional institute. Thereby I receive a NPA of Rs 9500 each month. and my HRA is being provided as a 30% of BasicPay+GradePay+NPA (rs. 47500) and comes to Rs. 14250 each month. Now I am also earning DA on BasicPay+GradePay+NPA (rs. 47500) as per the central govt norms.

I am staying in a rented place and paying Rs 10,000 each month as rentals.

My query is: how much is my HRA benefit applicable. The confusion is with regards specifically to

1. Whether NPA is included in basic for calculating HRA benefit ?

2. Whether DA is included in basic for calculating HRA benefit ?

Any help with pointers to the relevenat sections of income tax law would be highly appreciated.

Thanks

Dr. Vivek

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7 Replies

HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 18 December 2012

Hi Vivek,

NPA is not to be consider while cxalculating HRA.

DA is to be taken part of salary while calculating HRA if DA form parts of Basic. Generally it form parts.

HRA Calculations:

Least would be exempt.

1. Actaul amount received Rs 14,250

2. Rent paid - 10% of salary RS.10,000 - 10% of (47,500-9500) = Rs6200

3. If you are residing at Metro citiesD/B/C/M = 50% of salary 50% of (47500-9500)=Rs.19000

Exempted amount 6200

Taxable part = 14250-6200=8050

Hope this is clear to me.

Thanks

Harpreet Singh

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vivek (Assistant Professor) (35 Points)
Replied 19 December 2012

Thanks Harpreet fir your prompt reply. But I Am confused more now. Normally DA is not considered when calculating HRA for salary. Do you mean to say that DA would be considered for calculating basic salary for proposes of calculating Hra benefit. To make things clear, Here are salary breakups Basic 30000+ GP 8000 + NPA 9500 + HRA 14250 + DA 34200. Rent paid is 10000 Appreciate your help. Vivek

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 20 December 2012

D.A is requried to be taken only if it is considered in calculating the retirement benefits. For e.g. if 60% of the D.A. is considered for retirement benefits then the remaining 40% will not be consdiered for calculating HRA exemption.

HRA Exemption would be as udner:

38000+34200= 72200(Considering Da is considred @ 100 for calculating retirment benefits)

Rent paid in excess of 10% salary= 10000-7220= 6220

HRA Recd: 14250

So Rs.6220 is exempt from HRA received.

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HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 20 December 2012

HI Vivek...Gridhar is correct, we have to see whether our DA form parts of retirement benefits. Normaly it does. please check.

Thanks

Harpreet Singh

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vivek (Assistant Professor) (35 Points)
Replied 20 December 2012

Thanks Girdhar and Harpreet for your quick responses.

Can you pelase help clarify on retirement benefits.

I am covered under the New Pension Scheme and accordingly 10% of my (BASIC + GP + NPA + DA) = 8170 is being deducted as my monthly contrinution to the NPS (Tier 1) with and equal amount matched by the central government.

So does it mean 100% DA or 40% DA is being considered for retirement benefits ?

I am sorry for pestering you with these questions but understanding these issues will be vital for me as well as I am sure for any other government employee.

Thanks

Vivek