Engineer's Finance

The maximum amount of House Rent Allowances (H.R.A.) permitted to be enjoyed by an employee tax-free is up to 50% of the salary in the metros namely Delhi, Kolkata, Mumbai and Chennai and 40% in other cities.

If you notice carefully, there is a clause of “up to” and not flat. This was quite interesting to me when I figured that out. Why not keep it flat? The following is the reason. The government wants some amount of money to be paid by the employee from his pocket which does comes back to exchequer. According to 2A section of the Income Tax Act, the employee has to bear a minimum of 10% of the salary as Rent so that he can get the full benefit of 50% or 40% depending on where he is located. Continue reading →

As per new rule 3(9) (vi) “Salary” includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely: Continue reading →

I have seen many people forge medical bills for the tax benefit. I know it is not right but many people do it for the obvious reason to save tax. I don’t know how far it is going to save their penny. I did little math out of it and this is what I have figured it out. Continue reading →

I have decided to meticulously work out a plan for the financial year 2009-2010. As far as I know, every single individual wants to save up every penny that he pays as income tax. I was wondering whether it is possible and I think it is. Since I have learnt this hard way, I want to share it with you so that you don’t find it hard. Everything that is learnt by me will be shared and this is just for your information only. I am not a financial expert and you better get your advices from the right kind of people. Continue reading →