Source | The Economic Times : By Preeti Motiani
Consequently, it is important to know these limits and the conditions attached for claiming tax exemption. Further, some allowances are
fully taxable and it is important to know this too in order to calculate
Following is a list of some allowances and reimbursements which are often paid to employees as part of salary along with which are fully taxable, which are partially tax-exempt and the limits up to which these are exempted from tax.
1. House Rent Allowance (HRA): If you are receiving HRA as part of your salary and also pay rent for residential accommodation then you can claim the HRA paid to you as exempt from tax subject to
Minimum of the following HRA is exempt from tax:
(i) Actual HRA received
(ii) 50% of annual salary* if living in metro cities or else 40%
(iii) Excess of annual rent paid over 10% of annual salary*
*Salary here is considered as basic plus dearness allowance (if it forms part of retirement benefits) and commission received on the basis of sales turnover.