Basically, there are three types of allowances and they are: -
Partially -Exempt allowances
Let’s find out how Partially-Exempt allowances save taxes: -
House Rent Allowance
You can save your Income Tax by claiming House Rent Allowance. You can claim HRA when you live in a rented house, if you are paying rent to your parents, then you can claim HRA too. In order to claim HRA, you will have to provide your rent receipt with your Landlord’s PAN on it. HRA can be claimed up to the following extent: -
- The actual HRA received.
- Rent paid minus 10% of your basic salary.
- In case your rented house is located in a metro city, you can claim up to 50% of your basic salary and If you stay in a rented apartment in a non-metro city, then you can claim up to 40% of exemption.
You can save your Income Tax by claiming Conveyance Allowance, you can claim up to Rs.1600 per month as conveyance allowance if your employer does not provide any means of conveyance.
Children Education Allowance
If you are paying the tuition fees of 2children, in that case, you can claim a deduction of Rs.100 per month for each child. For claiming this allowance you need to provide the fees receipts of your children.
Hostel Expenditure Allowance
You can save your Income Tax by claiming Hostel Expenditure Allowance, you can claim up to Rs. 300 per child every month. This allowance can be claimed only for 2children. For claiming this allowance, you will have to provide Hostel fees receipts.
Are you tax prepared? We’re here to help.