ITR Filing: Keep these 5 allowances in mind while filing ITR, you can increase your tax savings
Allowances also prove to be very helpful in saving while filing ITR. It includes data on net tax due, tax deduction claimed and total taxable income.
ITR Filing: Allowances are the financial benefits that a salaried person receives from his employer. These are divided into several categories and can be claimed on a monthly basis by an employee. Allowances also prove to be very helpful in saving while filing ITR. It includes data on net tax due, tax deduction claimed and total taxable income.
There are three types of allowances, which include taxable, partially taxable and non-taxable. Among these, the allowances under Section 10 are quite popular, which are received by salaried people from their employers. The details of these allowances are listed in Form 16. Form 16 is an official document that contains tax deducted at source (TDS), allowances exempted under section 10 and salary details. It is a necessary document to file ITR during the prescribed period. Let us know under which allowances you can increase your tax savings, but before that remember that the last date for filing ITR is 31 July 2023, so to avoid any kind of trouble, file your ITR before the deadline.
House Rent Allowance (HRA)
Salaried individuals who are living in a rented house are eligible to claim HRA tax exemption. You will get a total of 50% of your salary (Basic Salary + Dearness Allowance (DA)) if you live in a metro area, or 40% if you live in a non-metro area. Second, additional rent payments that exceed 10% of the annual income (Base Salary plus DA).
Travel Assistance or Concessions
Travel expenses of the employee for holidays in India are counted as tax-free expenses. Employees can take leave from work to travel, and the company will reimburse them for their travel expenses in the form of tax-free allowances. Train, aircraft or public transport should be used as the mode of transport for claiming LTA.
Children’s education allowance
Payment up to Rs 100 per month per child is free for a maximum of two children.
Uniform allowance
Actual amount of expenditure incurred to maintain or acquire uniform worn in the performance of office or employment-related responsibilities is exempt.
Books and Periodical Allowance
As per the Income Tax law, reimbursement of expenses incurred for books, newspapers, periodicals, magazines etc. is tax-free. The amount reimbursed is lower of the billed amount or the amount included in the compensation package.
