Income Tax 2023–2024: Taxpayers look for any way to save their hard-earned cash when they file their returns. Your salary allowances are just one of several strategies you can use to reduce your taxes. We will discuss one such tax-saving strategy that can significantly reduce your tax liability in today's post.


Income Tax 2023–2024: It's very possible that your employer has begun requesting investment proof if you are a paid employee. Even though the deadline for paying income taxes is still months away, the investment proof you provide to your employer can help you save money on your pay because it will be used to determine your monthly wage.


The Income Tax department will, however, determine your real income tax for the Financial Year 2023–2024.



As you prepare to provide documentation to your employer, we would like to inform you of an allowance that is included in your pay and can significantly reduce your income tax.

Income Tax 2023-2024: House rent allowance (HRA) will save tax


One such option that allows for tax savings is the house rent allowance. It comes out of your pay as well.

You can see an HRA column on your pay stub if you look at it.


Although this is a taxable portion of the pay, there are tax savings available.

Only those who are paid a salary are eligible for the HRA tax exemption.

It is important to understand this, for that reason.

Income Tax 2023-2024: How does HRA provide tax exemption?

One such option that allows for tax savings is the house rent allowance. It comes out of your pay as well.

You can see an HRA column on your pay stub if you look at it.


Although this is a taxable portion of the pay, there are tax savings available.

Only those who are paid a salary are eligible for the HRA tax exemption.

It is important to understand this, for that reason.

Income Tax 2023-2024: How to calculate HRA for tax exemption?

How much tax can you save using HRAs (Income Tax Savings) is the question.

It is fairly easy to calculate.


Using HRA, tax exemption is available on the lowest amount under the three conditions listed below.

1. What percentage of your pay is HRA?
2. HRA is 50% of your base pay if you live in a metro area like Delhi, Mumbai, or Kolkata; in non-metro areas, it is 40% of your base pay.
3. The remaining sum following the subtraction of 10% of the annual pay from the annual rent that was really paid.

Income Tax 2023-2024: HRA calculation method

Assume you live and work in Delhi, where your monthly rent payment is Rs 15, 000.

Your dearness allowance (DA) is Rs 2,000, and your base wage is Rs 25,000.


Your company will pay you Rs 1 lakh as HRA in this case.

You can deduct up to Rs 1 lakh in taxes as HRA in such a case.

Income Tax 2023-2024: Which documents will be required?

You need to have a current rental agreement in order to take advantage of HRA.

The monthly fee, the duration of the lease, and your share of the costs should all be included in the rental agreement.


Both you and the landlord, even if they are your parents, must sign the agreement.

This agreement must be written on 100 or 200 rupee stamp paper.

In addition to the rent receipt, the landlord's PAN must be provided if the annual rent exceeds Rs 1 lakh.

After paying the rent, you ought to receive the landlord's receipt as well.