Mr Ajay has the following receipts from his employer 1 Basic pay Rs 35 000 per month 2 Dearness...........

Finance( Revenue Account ) Banking and Financial system in India

Mr. Ajay has the following receipts from his employer:

1. Basic pay Rs. 35,000 per month

2. Dearness allowance (DA) Rs. 5,000 per month

3. House rent allowance Rs. 9,000 per month

Assuming that he paid a rent of Rs. 10,000 per month for his accommodation at Mumbai and DA forms part of his salary for retirement benefits, exemption to Ajay in respect of HRA is:

Rs. 6,500

Rs. 9,000

Rs. 20,000

Rs. 6,000

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Explanation:

To determine the exemption for HRA, we need to calculate the least of the following:

- Actual HRA received: Rs. 9,000 per month.

- 50% of salary (Basic + DA) for Mumbai residents: Here, the salary is Rs. 35,000 (Basic) + Rs. 5,000 (DA) = Rs. 40,000 per month. So, 50% of Rs. 40,000 = Rs. 20,000.

- Rent paid minus 10% of salary (Basic + DA): Rent is Rs. 10,000, and 10% of salary is Rs. 4,000. So, Rent - 10% of salary = Rs. 10,000 - Rs. 4,000 = Rs. 6,000.

- Given the calculations, the exemption is Rs. 6,000 per month. Therefore:

Answer: Option: 4 - Rs. 6,000