Tuesday, 31 January 2017

A Comment on ways to save tax on House Rent Allowance

My comment on an article "Looking to save Tax on House Rent Allowance? Here is all you need to know" published in the economictimes.com Dated 28/01/2017.

"This article is very useful to gain knowledge regarding making use of maximum HRA deductible while computing your income tax calculations. 

Deduction admissible for HRA benefit is that whichever is the minimum of the following three amounts:
1) Actual HRA received as part of his salary
2) 50% of salary for metro city employee and 40% of salary for employees at other places
3) The excess of Actual Rent paid by employee above 10% of his salary amount supported by rent receipt or agreement.

The salaried employee should take care that HRA received by him never falls short of his claimable amount as this can be a drawback for him if he receives say Rs 1500 as HRA in a salary of Rs 10,000 and if pays rent of Rs 2500 or more. In this case, his 10% salary will be 1000 and difference amount of rent excess paid by him would be Rs 1500 or more. But, as he is receiving only 1500 as HRA, he can claim only 1500 for deduction allowable.

So, always keep a watch on your HRA element in your salary."

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