Last Update: January 11, 2023, 13:16 IST
Salaried people renting a house are eligible to claim HRA tax exemption.
One of the widely known is the allowances under Section 10 that salaried individuals receive from their employers and the details of which are listed in Form 16.
Perks are financial benefits that a salaried individual receives from his employer. Allowances are divided into several categories and can be claimed monthly by an employee. These allowances are helpful in saving while filing Income Tax Return (ITR), which includes net tax payable, tax deduction claimed and overall picture of total taxable income.
There are three broad types of allowances: taxable, partially taxable and non-taxable. One of the more well-known are the allowances under Section 10 that salaried people receive from their employers. The details of these allowances are listed in Form 16, an official document containing the tax deducted at source (TDS), allowances exempted under section 10 and the breakdown of wages. This is an important document for filing ITR during the prescribed period.
House Rent Allowance (HRA):
Salaried people renting a house are eligible to claim HRA tax exemption. You will receive a total of 50% of your salary (Basic Salary + Dearness Allowance) if you live in a metropolitan area, or 40% if you live in a non-metro area. Second, additional rent payment that exceeds 10% of the annual income (Base Salary plus DA)
Leave travel assistance or concessions:
As per this benefit, travel expenses of the employee for leave India are accepted as tax-exempt expenditure. Employees can take time off from work to travel, and the company will reimburse them for their travel expenses as a tax-free perquisite. Train, aircraft or public transport must be used as a mode of transport to claim LTA.
children’s Education allowance:
Maximum of two children are exempted from payment of up to Rs. 100 per month per child.
Uniform Allowance:
The cost of obtaining or maintaining the uniform worn in the performance of official or employment responsibilities is exempt from the actual amount spent.
Books and Periodical Allowance:
As per the Income Tax law, reimbursement of expenditure incurred for books, newspapers, periodicals, magazines etc. is tax-free. The amount reimbursed is less of the amount billed or included in the compensation package.
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