At the same time, under the new tax regime, the tax exemption limit has also been increased. Even after increasing the tax limit, if your income is coming in the tax category, then you can save tax by making multiple claims under the old tax system. You can also save tax by claiming house rent allowance under the old tax regime.

What is HRA?

House Rent Allowance is a type of allowance, which is given by an employer to its employee in lieu of payment of house rent expenses. HRA is included as a component of the salary of the employee. According to Rule 2A of the Income Tax Act, the benefit of HRA exemption is given to salaried people under section 10(13A). This exemption is not given under the new tax regime.

Know how to get benefit?

Let us tell that a person gets the benefit of HRA only if he chooses the old tax regime. If you choose the new tax regime, then you will not get the benefit of HRA. In such a situation, if you want to take advantage of the tax exemption available under HRA, then you will have to choose the old tax regime. Keep in mind, if the person receiving house rent allowance is living in his own house, then he does not get the benefit of HRA exemption and this entire amount comes under the tax net.

How to calculate tax exemption on HRA?

– 50 percent of basic pay plus DA for those living in metro cities

– 50% of basic pay plus DA for those living in non-metro cities

Actual rent paid less than 10% of basic pay plus DA

Related Article

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This travel allowance is provided by the employer and is mentioned in the salary package. If you are also given LTA by the company, then you can also take tax exemption on it. Tax exemption is available on LTA under section 10(5) of the Income Tax Act 1961. But there are some conditions about which every employee should know.

These are the rules regarding LTA

• For tax exemption on LTA, only those journeys can be included in the expenses which are done within the borders of India. The cost of traveling abroad is not included in this.
• You must be on leave from the company at the time you are including the travel expenses for LTA and this leave must be mentioned in the records of the company.
• In LTA, you can include the travel expenses of yourself, your life partner and two children. Apart from this, siblings or parents dependent on you can be included.
• In LTA, you can include the cost of rail travel, air travel, bus travel etc. i.e. the fare of any government or other recognized transport. Private car, cab, food and drink, stay and sightseeing expenses cannot be included in this. 
• If you are on a business trip and have taken your life partner and child along with you, then you will not get the benefit of LTA.

Tax exemption rules

• You cannot take tax exemption on LTA every year, in this tax exemption can be taken twice in 4 years. For this, the Income Tax Department has already fixed a block of four years each. If both you and your wife are employed and both are provided with LTA facility by the company, then the family can travel every year. In this case, both husband and wife can get tax-free money every year for two different calendar years.
• If for any reason you are not able to take tax exemption in the concerned block, then tax exemption can be taken in the next block on subsequent holiday travel. But, you will have to take such tax exemption in the first year of the next block itself. In this case, you can use the expenses of three leisure journeys in the next block for LTA tax exemption.
• There is one more thing to be understood regarding tax, that if the employer has given you LTA up to 1 lakh, but your travel expenses are 50 thousand rupees, then the exemption will be available only for 50 thousand rupees. If your expenditure is Rs 1.2 lakh, then the exemption amount will be Rs 1 lakh.

The post Leave Travel Allowance: Tax exemption can also be taken through LTA, but for this it is important to understand these rules first appeared on Rightsofemployees.com.

Even after increasing the tax limit, if your income is coming in the tax category, then you can save tax by making multiple claims under the old tax system. You can also save tax by claiming house rent allowance under the old tax regime.

It is important to understand how much tax salaried individuals can save on House Rent Allowance (HRA) and the rules for claiming it.

What is HRA

House Rent Allowance (HRA) is an allowance given by a company to an employee in lieu of payment of house rent expenses. HRA is included in the salary component that the company gives to the employee. An employee drawing salary under regulation number 2A of the Income Tax Act is eligible for HRA exemption under section 10(13A) of the Income Tax Act. This exemption is not given under the new tax regime.

Calculating Tax Exemption on HRA

50% of Basic Pay + DA for metro cities
40% of Basic Pay + DA for non-metro cities
Actual rent paid is less than 10% of Basic Pay + DA

What are the benefits of HRA

Those people who do not live in their own house and live in a rented house are benefited through HRA. For HRA i.e. House Rent Allowance, people have to give information to their employer after which they can claim HRA.

The post HRA Tax Calculation Rules! These are the tax exemption rules for claiming HRA, if you do not know then know first appeared on Rightsofemployees.com.