Q.Mr. A is employed with a private company in Kolkata. During the previous year 2025-26 he received: Basic Salary ₹40,000 per month; Dearness Allowance ₹15,000 per month (forming part of salary for retirement benefits); City Compensatory Allowance ₹1,000 per month; House Rent Allowance ₹18,000 per month (he paid rent of ₹20,000 per month for a flat in Kolkata); Bonus ₹50,000 during the year; Medical Allowance ₹1,500 per month; Children Education Allowance ₹400 per month for his one child; and Transport Allowance ₹1,800 per month (he is not specially-abled). Compute his Gross Salary for the year, from these allowances alone, for AY 2026-27.

Every fully-taxable allowance is added at its full received value, while HRA and Children Education Allowance are added only at their taxable (post-exemption) amount.

First, the two allowances that carry an exemption:

HRA: "Salary" for HRA = Basic + DA = (₹40,000 + ₹15,000) × 12 = ₹6,60,000. Exemption = least of: actual HRA received (₹18,000 × 12 = ₹2,16,000); rent paid minus 10% of salary (₹20,000 × 12 − 10% × ₹6,60,000 = ₹2,40,000 − ₹66,000 = ₹1,74,000); 50% of salary, Kolkata being a metro (50% × ₹6,60,000 = ₹3,30,000). Least = ₹1,74,000 exempt; taxable HRA = ₹2,16,000 − ₹1,74,000 = ₹42,000.

Children Education Allowance: Received ₹400 × 12 = ₹4,800 (one child). Exemption = ₹100 × 1 × 12 = ₹1,200. Taxable CEA = ₹4,800 − ₹1,200 = ₹3,600.

Every other allowance here is fully taxable at the amount actually received: Basic Salary ₹4,80,000; DA ₹1,80,000; CCA ₹12,000; Bonus ₹50,000; Medical Allowance ₹18,000; Transport Allowance ₹21,600 (fully taxable, since Mr. A is not specially-abled).

Adding the FULL amount of HRA and CEA received, instead of only their taxable (post-exemption) portion — every allowance in this table is added at the …