Malvika can pay rent to her parents and claim the allowance provided they own the place they currently live in. How can Malvika make use of this allowance? But she doesn’t live in a rented accommodation as she lives with her parents. Her company provides her with a house rent allowance. Read more about how to claim HRA exemption.Īlso do note that, if you receive HRA and don’t live on rent your HRA shall be fully taxable.Ĭase Study: Malvika works at an MNC in Bangalore.

The income tax laws have prescribed a method for computing the HRA that can be claimed as an exemption. This can be partially or completely exempt from taxes. Salaried individuals, who live in a rented house/apartment, can claim house rent allowance or HRA to lower tax outgo. It is usually a large portion of your total salary. Your PF is deducted at 12% of your basic salary. For instance, HRA is defined as a percentage (as per the company’s discretion) of this basic salary.

This is a fixed component in your paycheck and forms the basis of other portions of your salary, hence the name. SECTION I – Understanding Your Payslip Basic Salary If you want to understand your salary components or want to learn how you can save tax on your salary income, this guide is for you. This can help you figure out how to save on taxes. It is important to understand your tax slab and what each of your salary breakup components means. Rs.1,50,000 + 30% on income more than Rs.15,00,000Īs soon as the filing season begins, salaried classes are in a frenzy about taxes they must shell out for the said financial year. New Income Tax Regime From Budget 2023 Income range

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