Sunday, February 15, 2009

HRA - House Rent Allowance - Demystified

If you are a salaried person, you'd have seen a HRA component in your salary.
Also, you'd have known that you can save tax on whatever rent you pay.

Once you have the rental receipts from your house owner, you can fill in the following excel sheet to know how much you can exempt tax from your income.



Please edit only those in the yellow color and you can find the other details getting modified automatically.

If you enter your basic, your HRA is also modified for the first time. This is because most of the time the basic and HRA are inter related. It is mostly 40% of your basic pay.

In the example shown above, the basic pay is Rs. 8000/- and Rent paid is Rs. 5000/-
But, It is not worth showing more than Rs.4000/- as it doesn't affect your tax exemption in any way. Also, you will be eligible for exemption only if you pay rent for more than Rs.800/- in this case. In this case, the tax excluded is 3200/-, in which case, you save the tax on that amount based on your tax slab.

You just enter your basic, HRA and Rent paid and see the modification in other places.
If you are living with your family and want to claim HRA, you can do so by putting the house owner as your father or your mother. Most of the companies just ask for 3 month rental receipt.

Wednesday, February 11, 2009

The IPOD story

Kotak Securities had announced a referral scheme during the October 2008. I was a customer with Kotak then and they sent a mail to me as well about the referral scheme.

Actually, at that time, two of my friends were also interested in opening a brokerage account and I helped them in getting one in Kotak. There was a big hurdle for one of them while opening, but still managed to open the accounts successfully during the period mentioned in the mail.

As per the mail sent to me, I was supposed to receive a IPOD for referring two friends. But I got a call recently confirming my gift is packed and sent to my address and they say my gift is 'Ferrari RED perfume' (How funny!!).

On further enquiry, I found that they didn't include the second person's referral because his initial opening amount was Rs.20550/- and not above 50000. This came as a surprise to me and I found that they have included this clause after sending a mail to the kotak account holders to refer.

My perspective:
I have helped two of friends during their referral scheme period in opening an account with them. I have the perquisite to demand the IPOD from them.

Hope, this would be their perspective:
Modify the Terms and conditions if it doesn't favor us (them). This was the reason why they introduced the Rs.50000/- clause, which was not there when they send a mail to me.

So, Always keep an eye on the TERMS and CONDITIONS clause when you are eligible for the offers.