Income Tax Savings: HRA i.e. House Rent Allowance is a tool through which you can save tax. This is only part of your salary.
Can’t understand the maths of HRA? This is how it works to save tax
Income Tax Savings: Only a few days are left for the end of the financial year. In such a situation, this is the last chance to save tax. In most of the companies, the demand for investment proof has started from the employees. If you are also one of them, then understand that through which instruments you can save your tax. HRA i.e. House Rent Allowance is a tool through which you can save tax. This is only part of your salary.
If you see your salary slip, then a column of HRA will be visible in it. It is a part of taxable salary. But, through this you can also take tax benefits. The benefit of tax exemption on HRA is available only to the salaried class. Today we are going to give you all the information related to HRA.
How to get income tax exemption from HRA
The first condition for claiming tax exemption on HRA is that the taxpayer should live in a rented house. Under Section 10 (13A) of the Income Tax Act, tax exemption can be claimed from HRA i.e. House rent allowance. Total taxable income is calculated by deducting HRA from total income.
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How is HRA calculated?
Its calculation is very easy. The benefit of tax deduction through HRA can be availed on whichever amount is the least in the following 3 situations.
1. What is the share of HRA in your salary? 2. If you live in metro cities like Delhi, Mumbai, Kolkata then HRA will be 50% of basic salary, for non metro it includes 40% of salary. 3. Amount left after deducting 10% of the annual salary from the annual house rent actually paid.
Calculate like this
First of all, you have to see how much HRA you got from the company in a financial year. For this calculation, along with basic salary, dearness allowance ie DA and other things should be added to your salary. Only then you will be able to save your tax.
Suppose, you do a job in Delhi and live in a rented house. 15,000 per month as rent. Basic salary is Rs 25,000 and Dearness Allowance (DA) is Rs 2,000. In this case, you get Rs 1 lakh as HRA from the employer. In this case, you can save a maximum of Rs 1 lakh as HRA.
required documents
You must have a valid rent agreement to avail the benefit of HRA. The rent agreement should mention the monthly rent, the time frame of the agreement and the expenses from your side. The agreement should be signed by both you and the landlord, even if the landlord is your parent. This agreement is made on a stamp paper of 100 or 200 rupees. If the annual rent is more than Rs 1 lakh, then apart from the rent receipt, it is also necessary to give the PAN card of the landlord. You should also have the receipt received from the landlord after paying the rent.
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