Calculate the amount of Rs 12000 for 2 years at 10 per annum compound interest
Hint: Use compound interest formula which is given as $A=P{{\left( 1+\dfrac{r}{100} \right)}^{n}}-P$, where ‘r’ is interest in percentage, ‘n’ is time period in years, ‘P’ is principal amount and ‘A’ is amount after ‘n’ years.
Complete step-by-step answer: Show
Note: One may apply the formula of simple interest as $\dfrac{P\times R\times T}{100}$ where ‘P’ is principal amount, ‘R’ is interest and ‘T’ is time period but that has become wrong. So, be clear with both terms i.e simple and compound interest. One can answer compound interest as ‘A’ i.e. total amount after 10 years. So, don’t confuse compound interest and total amount. Principal for the first year = Rs 12000 Rate of interest = 10% p.a. Interest for the first year = Rs (12000 × 10 × 1) / 100 = Rs 1200 Amount at the end of first year = Rs 12000 + Rs 1200 = 13200 Principal for the second year = Rs 13200 Interest for the second year = Rs (13200 × 10 × 1) / 100 = Rs 1320 Amount at the end of second year = Rs 13200 + Rs 1320 = Rs 14520 Principal for the third year = Rs 14520 Interest for the third year = Rs (14520 × 10 × 1) / 100 = Rs 1452 Amount at the end of third year = Rs 14520 + Rs 1452 = Rs 15972 Hence, Compound interest for 3 year = Final amount – (original) Principal = Rs 15972 – Rs 12000 = Rs 3972 For Ist year Principal (P) = Rs.12,000 Rate (R) = 10% Time (T) = 1 year I = Interest =`(12,000xx10xx1)/100` = 120 × 10 = Rs.1200 Amount = P + I = Rs.12,000 + Rs.1200 = Rs.13,200 For IInd year P = Rs.13,200, R = 10%, Time (T) = 1 year ∴ Interest =`(13,200xx10xx1)/100` = 132 × 10 = Rs.1320 ∴ Amount in 2 years = Rs. (13,200) + (1320) = Rs.14520 Compound interest in 2 years = Rs.1200 + Rs.1320 = Rs.2520 [or directly = Rs.14520 − Rs.12000 = Rs.2520] House Rent Allowance means, if you are a salaried person and staying in a rented accommodation, then you can claim tax exemption for the rent paid. The rent can be partially or fully tax exempt. Who can claim HRA exemption? Self-employed and salaried people can claim HRA exemption, though under a different section of Income-tax as explained in the article. HRA Exemption Section House Rent Allowance (HRA) is exempted under section 10(13A) of the Income Tax Act. Also Read – How to download LIC premium Receipts Online House Rent Allowance rules and regulationsUnder House Rent Allowance rules and regulations, you will get exemption up to a minimum of the following 3 amounts:
The salary for this calculation means the 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. Please note that if the employee is staying in his own house or not paying any rent, he will not be eligible for the above tax exemption. HRA Calculation in Excel 2020-21You can click on the below link and download HRA calculation in Excel for 2020-21 HRA Calculation in Excel 2019-20 House Rent Allowance (HRA) – Factors Deciding Exemption From the above rules, it is clear that there are 4 factors which decide your eligibility for House Rent Allowance (HRA) exemption. They are:
HRA Calculation in Excel – Exemption Calculator for AY 2021-22Let us see an example of how you can do HRA calculation in Excel. The Excel can be used as HRA exemption calculator for AY 2021-22. Suresh is getting a Basic Pay of Rs. 50,000 per month and House Rent Allowance (HRA) of Rs. 20,000 per month. He is staying in rented premises in Chennai and is paying a monthly rent of Rs. 22,000. How is HRA calculated? HRA is calculated as per the 3 formulas given below:
Suresh is eligible for a deduction of Rs. 2,04,000 from his actual HRA of Rs. 2,40,000. So, he needs to pay tax for the balance of Rs. 36,000 only. House Rent Allowance (HRA) Tax Benefits – Lose without Landlord’s Pan The Circular (08/2013) states that “…an employee claiming exemption from tax with respect to House Rent Allowance received is now required to report the PAN of the landlord to the employer, if the rent paid by the employee to the landlord exceeds Rs. 1 Lakh per annum, along with the rent receipt.” In simple words, if the annual rent is above Rs. 1 Lakh, then the employee must report the PAN details of the landlord to the employer. If the landlord is not having a PAN,then the landlord must submit a declaration to this effect along with his name and address. The step is to plug 2 loopholes in the system:
These are the basics of House Rent Allowance exemption; In addition to the basics, now let us answer a few common questions asked by the readers… Can you claim HRA if you own a house?The answer to this question is both – Yes and No.
Can you claim both HRA and Home Loan for Tax Exemption? If you are paying the loan for your own house and staying in a rented accommodation, you can claim the tax benefits for both, HRA as well as the Loan property. Can HRA be claimed by both the husband and wife? Yes, HRA can be claimed by both the husband and wife if:
The husband and wife can claim HRA exemption proportionately but both can not claim the entire rent paid to landlord. Is HRA compulsory? No, HRA is not compulsory because it depends upon your employer to make house rent allowance as a part of your salary. Can husband pay rent to wife and claim HRA? Yes, the husband can pay rent to wife and claim HRA in case the wife owns the house. The same would be clubbed into the wife’s income under the head (Income from House Property) and taxed accordingly. But if the wife is not having any income and the house has been bought by you for her, the income will be clubbed in your income and taxed accordingly. Can I pay rent to my mother/brother/parents and claim HRA? Yes, you can claim HRA if you are paying rent to your mother, brother or parents but they need to show the income as Income under House Property. Is rent agreement mandatory for HRA exemption? No. Rent agreement is not mandatory for HRA exemption but it is better to have one as your CA can demand it for lower TDS. Is rent receipt mandatory for HRA exemption? If you are paying rent up to Rs. 3,000, rent receipt is not mandatory for house rent allowance exemption, but for rent above Rs. 3,000, rent receipt is mandatory for HRA exemption. Also, rent above Rs. 1 lakh per annum will require a PAN card of the landlord. What is 80GG claim deduction for HRA? Section 80GG applies for HRA claim deduction under the following conditions:
You can still claim deduction under 80GG. Read this article HRA rent receipt format in India There is no particular HRA rent receipt format in India, You can add following details in the rent receipt:
Probably I have included all points in this article, but if I have missed any point please let me know. I would be happy to include them in the article. What is the compound interest on Rs 12000 for 2 years at 10% per annum compounded annually?Hence, the compound interest is Rs. 2,520.
How much will 12000 amount to in 2 years at compound interest?⇒13356−12000=1356Rs.
How much compound interest will be on 14000 Rs for 2 years at 10% per annum compounded?Hence, Amount = Rs. 15876.
What is the compound interest on Rs 10000 for 2 years at rate of interest 10% per annum?10000 after 2 years, compounded annually with rate of interest being 10% per annum during the first year and 12% per annum during the second year, would be: - (a) Rs. 11320.
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