Union Budget 2020-21 [New]
The Union Budget of India also referred to as the Annual Financial Statement in the Article 112 of the Constitution of India, is the annual budget of the Republic of India. The Government presents it on the first day of February so that it could be materialized..
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Indian economy is ranked as the ninth(9th) largest in the world in terms of currency conversion and fourth largest in terms of purchasing power parity. The country is one of the G-20 major economies and a member of BRICS, and ASEAN. India is the seventeenth largest exporter and eleventh largest importer in the world.
The Indian economy depends much on agriculture, which now contributes to less than 25% of the GDP. Other important industries are mining, petroleum, diamond polishing, films, textiles, information technology services, and handicrafts. Most of India's industrial regions are centred around major cities. Now India has emerged as one of the largest players in software and business process outsourcing services. There are also a lot of small-scale industries that provide steady employment to many of its citizens in small towns and villages. Tourism Sector is also an important contributor to the Indian Economy.
India's major trading partners are the United States, Japan, China and the United Arab Emirates. India's main exports items include agricultural products, textile goods, gems and jewellery, software services and technology, engineering goods, chemicals and leather products while its main import commodities are crude oil, machinery, gems, fertiliser, chemicals.
Tax saving on HRA when living with Parents
Saving Income tax is main concern of all taxpayers. House rent allowance is the most effectualpart of tax saving.House Rent Allowance is a constituent of employee's salary package. This allowance is given by an employer to an employee to meet the cost of renting an accommodation. House Rent Allowance is exempted from Income Tax under section 10(13A) of the Income tax Act, 1961 and Rule 2 of Income Tax Rules.
In fact, the simplest way of saving tax is by investing through parents and children. If employee invest in correct way, the rate of return may be higher as well. Employee's parents can also help bring down his tax liability in numerous ways.
Employees generally receive a house rent allowance from their employers. This is a part of the salary package, in agreement with the terms and conditions of employment. House Rent Allowance is given to meet the cost of a rented house taken by the employee for his stay.
The Income Tax Act allows for deduction in respect of the HRA paid to employees. It is established that the total HRA is not deductible. HRA is an allowance and is subject to income tax.
There are some minimum conditions to claim tax rebate from HRA:
- Employee should be staying in a rented accommodation.
- The house should not be owned by employee.
- Employee should be paying the rent.
- This rent must be in excess of 10% of salary (salary, in this case, includes Employee's basic salary + dearness allowance).
- 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro
If these conditions are fulfilled, the HRA will be beneficial for employees.
The rented premises must not be owned by him. In case one stays in an own house, nothing is deductible and the entire amount of HRA received is subject to tax.
Salary means basic salary which includes dearness allowance if the terms of employment provide for it, and commission based on a fixed percentage of turnover achieved by the employee. The deduction will be available only for the period during which the rented house is occupied by the employee and not for any period after that.
Meaning of Salary for calculation the tax exemption of HRA.
Salary means (Basic + D.A + Commission based on fixed percentage on turnover).
Salary is to be taken on due basis in respect of the period during which accommodation is occupied by the employee in the previous year.
When employee staying with parents, it is very much permissible under Income Tax Act provided property is registered in the name of parent/s.If individual is residing in a house owned by his parents and he is paying rent to them, technically, they are the landlords. Therefore, employee could, thus, claim an exemption, provided they show the same transaction in their income tax returns.
Rent to spouse is not permissible, as a husband and wife relationship is not considered moneymaking. Spouses are intended to stay together.
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