Many taxpayers who file their income tax returns late are busy asking about the possible allowances that can reduce their taxes. Deductions and exemption limits have not changed in recent years, and there are many ways to take advantage of them.
Salaried employees can benefit from various financial benefits in the form of allowances to reduce their personal taxes. These allowances are available on a monthly basis and must be claimed when submitting your income tax return (ITR). The allowances like House Rent Allowance (HRA), Leave or Leave Allowance (LTC or LTA), Child Benefit, and others are given under the Section 10 of the Income Tax Act to enable people to significantly reduce their taxes with these deductions. and liberation.
House Rent Allowance (HRA)
You can certainly claim HRA tax exemption if you are salaried and live on rent. The exemption amount will be the lower of the following:
-Total HRA received
-40 percent of salary (Basic Salary + Allowance) for non-metro cities; 50 percent, if the property is located in Mumbai, Calcutta, Delhi, or Chennai
– Rent more than 10 percent of annual salary (Basic Salary + Allowance)
To get HRA exemption you must know that:
Employees living in their own house or not on rent cannot claim HRA exemption while filing tax. This means that the amount of HRA they get as part of their pay package is fully taxable.
Leave Allowance or Allowance (LTC/LTA)
Employees can deduct the cost of leisure travel to India as a tax deduction. To take advantage of this benefit, the employee must take time off work to travel anywhere in India, and the employer will allow the travel cost, which depends on the total salary, as a tax-free allowance. . Modes of travel include rail, air and public transport.
Employees must remember that employers provide up to ₹100 per month per child, up to a maximum of two children, on submission of proof of investment at the end of the year. All this is tax free.
If a job requires him to keep or buy a uniform during working hours, the employer will pay tax-free.
Books and periodical allowances
This is a lesser-known requirement because not many companies offer compensation to their employees. This is because some sections of the Income Tax Act allow taxpayers to make tax-free allowances for the purchase of books, newspapers, magazines, newspapers, and so on. The amount varies from person to person and is included in the salary package provided to the employee each year.
Companies used to provide compensation when employees were asked to relocate to other cities for business reasons long before the Covid-19 season. This is separate from the travel allowance. The employer must pay for transportation, registration, packaging, the first 15 days of stay, and train tickets. All these benefits are tax free.
When your employer allows you to assign an assistant to perform official duties in the office, such as when you are a senior civil servant, you are entitled to the assistant’s allowance.
Apart from the above benefits, many salaried people also benefit from some lesser known benefits. In addition, some of these allowances are included in the pay sheets of central government employees. These include:
- Allowance for work in hilly areas: These allowances, also called weather allowances, are given for working in high or hilly areas.
- Allowance for work in Scheduled Areas, Tribes or Agencies: Employers in Karnataka, West Bengal, MP, Assam, Orissa, Tamil Nadu, Bihar, UP and Tripura provide employees ₹200 allowance for work in tribal areas.
- Compensation in border, remote, remote or remote areas: These allowances, which originate from ₹200 of them ₹1,300 per month, tax-free under Rule 2BB of the Income-tax Act, 1961.
- Compensation for the Island: This is given to the armed forces of Andaman and Nicobar. The monthly allowance is fixed at ₹3,250, which he may include in the exemption list while filing the IT return.
- Compensation: This benefit is given to employees with physical disabilities who work and have to go to work. The monthly stipend is ₹1,600 for moving between work and residence.
The discussion on the Union budget 2023 will be held in the Indian Parliament on February 01 this year. Taxpayers have placed their hopes on the country’s finance minister in the expectation that this year’s Budget will include more areas for cuts and exceptions given the impact of the recession. the cost of living in the stock.
Financial independence can also be achieved with a low salary.
First published: 21 Jan 2023, 09:47 IST